Business Choices - Opportunity Costs/Trade-offs

Question 1

What is an opportunity cost?

Answer 1

the loss of other alternatives when one alternative is chosen

Question 2

What is a trade-off?

Answer 2

Having more of one thing potentially results in having less of another

Question 3

How can small businesses face opportunity cost issues?

Answer 3

when investing too much money into stock this could be used elsewhere
overstretching trying to do too many decisions at once
take care with costly decisions

Question 4

Why do businesses face decisions?

Answer 4

to meet customer preferences
markets are dynamic
to keep resources scarce
to maximise resource use

Question 5

What are some personal opportunity costs?

Answer 5

entrepreneur may risk regular income to start a new business
investment into assets instead of personal income
long hours - family time

Question 6

Opportunity cost when developing business ideas?

Answer 6

choosing one idea not the other
cost of launching product - further development
committing capital into assets - restrict other opportunities

Question 7

What is the government wish list?

Answer 7

high stable growth, low inflation rates, balance of payments surplus (when more exports than imports), low unemployment.