Scarcity : Trade-offs :: Opportunity Cost : ?

Scarcity refers to the limited resources we have, which forces us to make choices about how to use them. When we make these choices, we encounter trade-offs, meaning that choosing one option often means giving up another. Opportunity cost is closely related to this idea, as it represents the value of the next best alternative that we give up when making a decision. For example, if you spend your allowance on a video game instead of saving it for a new bike, the opportunity cost is the bike you could have bought. In this way, scarcity and trade-offs lead us to understand the concept of opportunity cost, as we weigh our options and their potential benefits.