Opportunity Cost Flashcards
1
Q
Opp. Cost Definition
A
The value of the next best alternative forgone
2
Q
How to calculate Opp. Cost
A
Return on Alternative chosen - Return on Alternative not chosen
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
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
5
Q
PPF curve
A
