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Opportunity cost is the next best alternative foregone.
The fundamental problem of economics is the issue of scarcity. Therefore we are concerned with the optimal use and distribution of these scarce resources. Wherever there is scarcity we are forced to make choices. If we have £20 we can spend it on an economic textbook or we can enjoy a meal in a restaurant.
If we spend that £20 on a textbook, the opportunity cost is the restaurant meal we cannot afford to pay.
Production Possibility Frontier and opportunity cost
Moving from Point A to B will lead to an increase in services (22-25). But, the opportunity cost is that output of goods falls from 15 to 11.
Therefore, the opportunity cost of increasing consumption of services is the 4 goods foregone
At point C, the economy is inefficient. We can increase both goods and services without any opportunity cost.
Examples of Opportunity Cost
The Cost of War. If the government spends $870bn on a war, it is $870bn they cannot spend on education, health care or cutting taxes / reducing budget deficit.
Spending on new road. If the government build a new road, then that money can’t be used for alternative spending plans, such as education and health care.
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Opportunity cost is the cost of a foregone alternative. If you chose one alternative over another, then the cost of choosing that alternative is an opportunity cost. Opportunity cost is the benefits you lose by choosing one alternative over another one. The opportunity cost of choosing one investment over another one.
i think this definition will be easier for you to understand
but pls study and practise the graph its very important