Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Opportunity cost
B
Marginal benefit
C
Fixed cost
D
Economic surplus
Understanding the Answer
Let's break down why this is correct
Answer
In a cost-benefit analysis, choosing one project over another shows the concept of trade-offs in economics. This means that when we decide to invest resources, like money or time, into one project, we are giving up the chance to invest in something else. For example, if a city decides to spend money on building a new park instead of repairing roads, they believe the benefits of the park, like providing a place for recreation, are greater than the benefits of fixing the roads at that moment. This choice highlights the idea that every decision has an opportunity cost, which is what we lose by not choosing the other option. Understanding trade-offs helps us make better decisions by considering what we gain and what we give up.
Detailed Explanation
Opportunity cost is what you give up when you choose one option over another. Other options are incorrect because Marginal benefit is the extra gain from one more unit of something; Fixed costs are expenses that don't change with the level of production.
Key Concepts
trade-off
cost-benefit analysis
Topic
Trade-offs in Economics
Difficulty
medium level question
Cognitive Level
understand
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