what is opportunity cost?
Answers
Explanation:
In microeconomic theory, opportunity cost, or alternative cost, is the loss of potential gain from other alternatives when one particular alternative is chosen over the others.[1] In simple terms, opportunity cost is the loss of the benefit that could have been enjoyed had a given choice not been made.
As a representation of the relationship between scarcity and choice,[2] the objective of opportunity cost is to ensure efficient use of scarce resources.[3] It incorporates all associated costs of a decision, both explicit and implicit.[4] Opportunity cost also includes the utility or economic benefit an individual lost, it is indeed more than the monetary payment or actions taken. As an example, to go for a walk may not have any financial costs imbedded to it. Yet, the opportunity forgone is the time spent walking which could have been used instead for other purposes such as earning an income.[3]
Regardless of the time of occurrence of an activity, if scarcity was non-existent then all demands of a person are satiated. It’s only through scarcity that choice becomes essential which results in ultimately making a selection and/or decision.[2]
hope it helps u
Opportunity cost refers to that cost which we are sacrificing..
for ex-- if a person is getting a job of 5lakh and he is getting another job of 8 lakh.
if he will choose the job of 8 lakh then he will sacrifice the job of 5 lakh..
so in this case the oppurtunity cost is 5 lakh
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