Scarcity is a Ever-present situation in all markets whereby either less goods are available than the demand for them, or only too little money is available to their potential buyers for making the purchase. This universal phenomenon leads to the definition of economics as the "science of allocation of scarce resources."
Opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
Opportunity cost can be defined as the value of the next best alternative forgone. It can be defined as the revenue or the profit that a person/organization would have been able to earn if it had exercised the alternative decision instead of the decision that has been made.
Opportunity-cost has many practical business applications, because opportunity costs will exist as long as resource scarcity exists. The value of the next-best alternative should be considered when choosing among production possibilities, calculating the cost of capital, analyzing comparative advantages, and even choosing which product to buy or how to spend time.
2. *(a) what is Marginal Analysis? (b) Why Is Marginal Analysis Important in Economics? (c) What is the role of Marginal analysis?
Marginal Analysis is the process of considering small changes in a decision (control variable) and determining whether a given change will improve the ultimate objective this technique is widely used in business decision-making and ties together much of economic thought
The process of identifying the benefits and costs of different alternatives by adding one extra unit of any input variable (raw materials, Machines and workers etc.) but others factors should be remaining constant. This is the very useful tool for evaluating the alternative in the process of...