Can opportunity cost be zero? Explain the concepts of scarcity and opportunity cost?

Can opportunity cost be zero?

Explain the concepts of scarcity and opportunity cost?

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Expert Solution

Answer : No , opportunity cost can never be zero. Opportunity cost occur when we choose the best one on others. Because at the same time we losing the second best one which makes cost to us. For example, I have $10 to spend. Now let I am spending this amount on purchasing a notebook because of my need whose price is $10. At the same time I am losing my second best choices . Because I can spend $10 on purchasing other things. But here I am choosing notebook. As notebook is my needy good, my best choice is notebook which creates opportunity cost to me for my second best choice. Therefore, opportunity cost can never be zero.

Scarcity means limited resources to use for which we have to make choices and we always choice the best one . If we make choice for the best one then we loose the second best one because of limited resources which makes cost to us and this cost is known as opportunity cost.

In the above example, I have only $10 to spend. This amount is limited and hence I make choice to spend this. Here $10 is the scarcity amount and my losing second best choice is opportunity cost.

Rahul Sunny answered 1 year ago

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