Question

Importance of opportunity cost to individuals

Answer 1

Answer:

Explanation:

Opportunity cost like other basic concepts of Economics – scarcity, scale of preference and choice is important to an individual who represents the consumer or household, or firm or productive unit and the government that form the three decision making bodies in an economy. The concept of opportunity cost arises from choice which is central to the subject-matter of economics and this arises as a result of the limited available resources vis-a-vis unlimited human wants. Since every economic problem involves choice and ever, choice involves opportunity cost, therefore Opportunity cost is very important.

Answer 2

Opportunity costs are the potential advantages that a person, investor, or company forgoes while deciding between two options. Opportunity costs are by definition invisible, making it simple to ignore them.

• Due to the problem of resource scarcity, the person is forced to make a decision. Therefore, the idea of opportunity cost applies to him. It aids him in choosing how to allocate his limited resources.

It fosters decision-making for the individual.

• Due to the problem of resource scarcity, the person is forced to make a decision.
• Therefore, the idea of opportunity cost applies to him. It aids him in choosing how to allocate his limited resources.

It assists people in allocating limited resources.

• Through the analysis of opportunity cost, a person can make decisions where the real advantages outweigh the opportunity cost, allowing for the most efficient use of scarce resources.

Placing our desires in order.

• Establish your needs based on your wants. However, you may always order what is crucial and what can be disregarded.
• Examine each expense on the list to determine which are "must pay" and "may be delayed."

Assists an individual in making rational choices.

• Opportunity costs can have an impact on many - and important - aspects of life, including one's finances, work,  home and family, and other aspects of his way of life.
• In general, it is having to make a decision and then living with the results, whether it be with money, time, or lifestyle choices.