1. Briefly describe the concept of an “opportunity cost”
Opportunity cost by choosing to do something, you give up the option of doing something else. FOR INSTANCE, IF YOU PAY A BILL TOO EARLY YOU LOSE THE OPTION OF INVESTING THE MONEY AND EARNING SOME INTEREST INCOME. The loss of income in this case is considered to be the opportunity cost.
Opportunity Cost from you do something
In microeconomic theory, the opportunity cost of a choice is the value of the best alternative foregone, where a choice needs to be made between several mutually exclusive alternatives given limited resources. Assuming the best choice is made, it is the "cost" incurred by not enjoying the benefit that would be had by taking the second best choice available.[1] The New Oxford American Dictionary defines it as "the loss of potential gain from other alternatives when one alternative is chosen". Opportunity cost is a key concept in economics, and has been described as expressing "the basic relationship between scarcity and choice".[2] The notion of opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently.[3] Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, pleasure or any other benefit that provides utility should also be considered opportunity costs.