Define opportunity cost/what do you mean by Marginal
opportunity cost.
Answers
In Economics,opportunity cost basically means cost of choosing an option or making a choice.In other words,it refers to sacrificing or giving up other options or choices for availing some.
Explanation:
The concept of opportunity cost has a widespread implication in our regular life.We make various choices in our life or choose options by giving up or sacrificing other.For example,an individual or employee who is going to office everyday is giving up the opportunity to engage in any personal business and earn revenue during the same time.A student who is attending school or college everyday is sacrificing the opportunity to conduct a part time job and earn side income.These are all examples of opportunity cost in our regular life.
Marginal opportunity cost can be best understood from the perspective of consumer behavior.It indicates the marginal rate of substitution between various goods or products that a consumer purchases.In shows how much of other goods/products a consumer is willing to give up or actually gives up to consume or buy one unit of a certain product/good.Hence, it is a marginal or incremental concept.