Question

Opportunity costs refer to:

a) Current spending habits.
b) Avoiding the use of consumer credit.
c) Storage facilities to make financial documents easily available.
d) Changing economic conditions that affect a person's cost of _____.

Answer 1

Opportunity costs represent the value of the best alternative that is given up when making a decision, such as choosing between buying a burger or bus tickets. It reflects the trade-offs people face and varies from person to person because everyone has different preferences and desires.

Step-by-step explanation:

Opportunity cost refers to what an individual must give up in order to obtain what they desire. This is a fundamental concept in economics and involves considering the value of the next best alternative that is foregone when making a decision. For example, if Alphonso has money to purchase a burger, but by doing so he gives up the chance to buy four bus tickets, the opportunity cost of the burger is the four bus tickets. People face trade-offs and have to choose between different alternatives based on their preferences and desires.

Choices are omnipresent and involve opportunity costs. For instance, if you skip your economics class, you miss out on the education you could have received, which is the opportunity cost of sleeping in. Similarly, spending your income on one pleasure means you cannot spend that money on another item or experience, indicating the pervasive nature of opportunity costs in our daily lives.