Let’s consider opportunity cost. It is a cost of something which holds the highest value alternative which an individual must give up in order to get it later.
Let’s consider an example of a student in school: The opportunity cost will be featured under two segments:
- Products and things that you cannot buy because of lack of affordability:
- Activities you can’t pursue because of lack of time
Think about a situation where you could have spent the money on other activities rather than your tuition fees and books. Probably you would have booked a ticket for a movie or a ball game if you wouldn’t have spent it on tuition fees. Consider other opportunity costs where one could have been working as a teller in a bank if you were not paying time to your school. Such a job opportunity would have availed you a figure of 25,000 dollars for a year which leads to another opportunity where you could have bought some leisure products or things from those 25,000 dollars.
These opportunity costs mentioned above are categorized under all or nothing costs where a student can achieve either an either opportunity costs or nothing at all. But every opportunity cost is not declared in the same notion but rather includes a feature of how much an activity can dedicated to the similar cost.
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Links of Next Macroeconomics Topics:-
- How Much Choosing At the Margin
- Choices Respond To Incentives
- Economics as Social Science And Policy Tool
- Graph Used In Economic Model
- Economic Problem
- Market Equilibrium
- Employment and Unemployment
- Measuring GDP and Economic Growth
- Economic Growth Macroeconomics
- Policies for Achieving Faster Growth
- The Exchange Rate and the Balance of Payments
- The Dollar and Carry Trade
- Expenditure Multiplier Know the Keynesian Model