Opportunity Cost Flashcards

1
Q

Opp. Cost Definition

A

The value of the next best alternative forgone

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2
Q

How to calculate Opp. Cost

A

Return on Alternative chosen - Return on Alternative not chosen

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3
Q

Usefulness of Opp. cost in dealing with basic econ. Probelm

A

Useful:
Helps with choice by displaying outcome possibilities of the options

Helps with the choice of allocation of resources and where maximisation occurs

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4
Q

Usefulness of Opp. cost in dealing with basic econ. problem

A

Useful:
Helps with choice by displaying outcome possibilities of the options

Helps with the choice of allocation of resources and where maximisation occurs

Not useful:
Hard to quantify to personal preferences

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5
Q

PPF curve

A
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