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What does the concept of “opportunity cost” mean?

What does the concept of “opportunity cost” mean?

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Expert Solution

  • The concept of opportunity cost reflects the scarcity of resources in the economy.
  • That is when the resources are scarce, only one good can be produced using those resources.
  • The opportunity cost shows how one has to give the production of one good in order to produce another one.
  • Hence it can be defined as the benefit that has been forgone when one is forced to give up a particular choice or option in order to choose another due to the problem of scarcity.
  • The benefit forgone is hence considered as the "opportunity cost".

Rahul Sunny answered 1 year ago
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