Quick Answer: What Is Opportunity Cost Simple Definition?

Opportunity cost is the value of the next best thing you give up whenever you make a decision.

It is “the loss of potential gain from other alternatives when one alternative is chosen”.

The utility has to be more than the opportunity cost for it to be a good choice in economics.

What is opportunity cost definition?

A benefit, profit, or value of something that must be given up to acquire or achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost.

What is opportunity cost kid definition?

Opportunity cost is a term used in economics, to mean the cost of something in terms of opportunity foregone. For example, if a city decides to build a hospital on some vacant land, the opportunity cost is the other things that might have been done with that same land instead.

What is opportunity cost and what does it mean for you?

When you hear the term “opportunity cost” you are really hearing a fancy word for “trade-off.” Every time you make a choice, there is a trade-off to consider. The most basic definition of opportunity cost is the price of the next best thing you could have done had you not made your first choice.

What is the definition of opportunity cost quizlet?

guns or butter. the idea that a country that decides to produce more military goods has fewer resources to produce consumer goods and vice versa. opportunity cost. the most desirable alternative given up as the result of a decision.

What is opportunity cost simple words?

Opportunity cost. From Wikipedia, the free encyclopedia. Opportunity cost is the value of the next best thing you give up whenever you make a decision. It is “the loss of potential gain from other alternatives when one alternative is chosen”.

What is opportunity cost in economy?

In microeconomic theory, the opportunity cost, or alternative cost, of making a particular choice is the value of the most valuable choice out of those that were not taken. Opportunity cost is a key concept in economics, and has been described as expressing “the basic relationship between scarcity and choice”.

What are examples of opportunity costs?

When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can’t spend the money on something else.

What is an example of opportunity cost in your life?

The opportunity cost of taking a vacation instead of spending the money on a new car is not getting a new car. When the government spends $15 billion on interest for the national debt, the opportunity cost is the programs the money might have been spent on, like education or healthcare.

What is the opportunity cost of saving?

Because resources are scarce, every decision involves an opportunity cost. The opportunity cost is that you will have less money to buy goods and services in the future. Saving builds wealth to buy goods and services such as a car, house, or vacation in the future.