Opportunity cost Flashcards
What is opportunity cost
It is the next best alternative foregone (given up) when making decision
Who are the influence of opportunity cost on decision making
1) Consumers
2) Producers
3) Workers
4) Government
What are the significance of consumers in decision making
Consumers have limited incomes, so whenever they purchase a good they give up the benefit of another
What are the significance of producers in decision making
Producers need to choose between competing business opportunities
What are the significance of workers in decision making
Workers tend to specialise, so if a person chooses to be a doctor, they have given up the benefit of becoming a lawyer
In general, how do economic agents choose the right options
They choose the option that will give them the greatest economic return.
