opportunity cost. Flashcards
1
Q
what is opportunity cost?
A
is the benefit that is sacrificed by taking a certain decision.
cost of giving up one opportunity for another one. the ‘next best alternative’ that must be given up comes with a cost.
2
Q
what is the law of increasing opportunity cost?
A
As you increase the production of one good, the opportunity cost to produce the additional good will increase.
3
Q
what is the law of decreasing opportunity cost?
A
a firm’s opportunity cost reduces when production declines.
