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Economic Questions: Opportunity Cost - Assignment Example

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Summary

The author examines an opportunity cost which refers to the benefits or value of a thing that needs to be given up in order to achieve something else. In simpler terms, opportunity cost refers to what needs to be forgone to be able to achieve something else. …

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Subject: Macro & Microeconomics
Type: Assignment
Level: High School
Pages: 1 (250 words)
Downloads: 5
Author: raujasper

Extract of sample "Economic Questions: Opportunity Cost"

If an individual requires to judge whether a holiday is a better option or buying a DIY set is a better option (based on their economic condition), then the benefits of both need to be weighed and based on this the individual can make a more informed decision. Consumers need to ensure that their money is invested in an area which had a higher return and proves to be more beneficial based on their economic condition and for that period of time. Hence opportunity costs allow consumers to make more informed decisions (McConnell, Brue, & Flynn, 2008).

While understanding the concept of Production Possibility curve, it is essential to learn in detail the possible outcomes and combinations that need to be produced within the economic resources that are available in the period. This can be clearly noted as the PPC tends to provide the maximum outcomes which help give a clearer idea of the law of diminishing returns.

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