How can trade-offs and opportunity costs be measured?

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Business

Sarai Bean

5 June, 09:32

How can trade-offs and opportunity costs be measured?

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Amya Armstrong · Answer 1

see below

Explanation:

The terms opportunity cost and trade-off are, in most cases, used interchangeably. Opportunity cost occurs due to scarcity of resources. Individuals have to make choices among the options available to them. The fortified option is the trade-off or the opportunity cost.

Opportunity cost is measured by obtaining the value of the next best alternative. In other words, the cost of the most valuable sacrificed option is the opportunity cost. For example, if a student has $50, he can purchase a meal valued at $45, watch a movie valued at $40 or buy a book for $ 47. assuming he opts to buy the book, the meal becomes the opportunity cost because it represents the next best alternative.