When making decisions about how to allocate your limited resources, you encounter a situation where you must choose between two activities. This situation illustrates the concept of __________, which is central to microeconomic decision-making.

When you have to choose between two activities because you have limited resources, this situation illustrates the concept of opportunity cost. Opportunity cost is what you give up when you choose one option over another. For example, if you decide to spend your Saturday studying for a test instead of going to a concert, the opportunity cost is the fun and enjoyment you would have experienced at the concert. Understanding opportunity cost helps you make better decisions by considering what you are sacrificing. In microeconomics, this concept is important because it shows how people and businesses make choices based on their limited resources.