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Kate considers the alternative that will be lost if she decides to spend her savings on buying a card. What is the economic term for thought process?

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The economic term is: Opportunity Cost.


The term opportunity cost is a measure that considers the person's preferences, that means that it is different in every person. It analizes the things you are leaving over whenever you make a decision.

In Katie's example, the opportunity cost of the money she wabts to spend in buying a car is what she is not going to do with that money.



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