Scarcity of resources is one of the more basic concepts of economics. Scarcity needs trade-offs, and trade-offs result in an opportunity cost. While the cost of a good or service often is thought of in monetary terms, the opportunity cost of a decision is based on what must be given up as a result of the decision. Any decision that involves a choice between two or more options has an opportunity cost. Opportunity cost, scarcity and trade-off are important in our daily life because it affects us every day in different ways and helps us make better economic choices. To begin with, scarcity is a condition when humans have infinitive wants but limited resources; therefore, not all their wishes can be fulfilled, so there is an opportunity cost involved every time they make a decision to satisfy one wish rather than the other. For example when a family has $10 to spend on a movie ticket, they will have $10 less to spend on a gasoline. Opportunity cost is a missed opportunity, an opportunity someone loses when he/she makes a choice. It is the second best alternative they have to sacrifice when they decide to choose something instead of the other. Another example that I faced related with opportunity cost was a situation two weeks ago. I had a biology test, and my sister invited me to eat ice cream. I chose to stay in my house instead of going out in order to have more time to study for my test although I really wanted to go out and get some ice cream. I decide to stay in my house and study instead of going out for an ice cream because my time was a limited resource. Thus, I had to decide between the need of studying and the desired to go out. Moreover, I had to pay an opportunity cost which is the highest price pay in order to engage in an activity. In my case my opportunity cost was the possibility of going out for an ice cream and having a good time with my family.
Opportunity cost contrasts to accounting cost in that accounting costs do not consider forgone...
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