1.5.5 Business Choices ****** Flashcards
1
Q
Define opportunity cost
A
When choosing between different alternatives, the opportunity cost is the benefit lost from the next best alternative to the one that’s been chosen.
2
Q
What are the problems with opportunity cost?
A
Land, labour capital and enterprise are limited resources
3
Q
Define trade-offs
A
Where a decision maker faces a compromise between two different alternatives
4
Q
What are some disadvantages of trade-offs?
A
May not be possible to achieve 2 things as there is only so much capital and resources
May result in the business completing less of one thing
