Overview
Calculating opportunity costs is a fundamental concept in economics that helps individuals and businesses make informed decisions. By understanding the value of the next best alternative, one can better assess the trade-offs involved in any choice. This concept is not only applicable in financial co...
Key Terms
Example: Choosing to spend time studying instead of going out with friends has an opportunity cost of lost social time.
Example: Choosing between buying a new phone or saving for a vacation.
Example: A company deciding how to allocate its budget for marketing versus research.
Example: Deciding whether to invest in stocks or bonds.
Example: Evaluating whether to buy a car based on its purchase price and maintenance costs.
Example: The enjoyment from eating one more slice of pizza.