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Define scarcity and opportunity cost. What

role do these concepts play in the making of management
decisions?

1 Answer

1 vote
Scarcity is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources. Opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. These concepts play a key role in management decisions because managers must decide how to allocate scarce resources in order to maximize their value and achieve their goals. By understanding the trade-offs involved in different decisions, managers can make more informed choices and avoid wasting resources.
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