Question

Importance of opportunity cost to individual​

Answer 1

The concept of the opportunity cost underlines the basic economic problems of scarcity and choice, and is relevant to the behaviour of individuals or consumers, firm or producers and of the government.

Step-by-step explanation:

Answer 2

Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. ... Understanding the potential missed opportunities foregone by choosing one investment over another allows for better decision-making.

(ii) Importance of opportunity cost to the Government: It helps the government in deciding which sector will receive more resources. It helps the government in making decision on how to spend its revenue in carrying out its numerous projects, e.g. the government may allocate more resources to defence or infrastructure.

The concept of the opportunity cost underlines the basic economic problems of scarcity and choice, and is relevant to the behaviour of individuals or consumers, firm or producers and of the government. ... It helps him in deciding how to spend his scarce resources.