business choices

Question 1

What is an opportunity cost?

Answer 1

The value of the next best alternative foregone.

Question 2

Why do we have opportunity costs?

Answer 2

Land, labour, capital (money put into the business) and enterprise are limited resources
However our wants are unlimited
This causes scarcity

Question 3

What is a trade off?

Answer 3

In business to achieve two things may not be possible, as there is only so much capital and only so much of other resources.

Essentially a trade off is a compromise.