Opportunity Cost

opportunity appeal is defined by Sloman and Norris as (1999, pg. 09) the cost of any activity measured in terms of the best resource forg cardinal. It is important to note that the definition refers to the best ersatz forg sensation, not the top three alternatives or top ten. search cost is nevertheless concerned with the result of making a particular decision and the losses incurred or the impact that select go out have. Making what may be considered to be the mighty decision at the time is based various criteria, nigh of which will be influenced by personal values and experiences. luck cost is an important concept in economics as it fuck be used to predict the feasibility of maven decision over other. It shows how the decision to increase the input of resources to one and but(a) area could dramatically affect the output in another(prenominal) area. A simplified example is a country that only has two major trades, rice and husk.

The country has maintained an withal balance for many years but climatic changes at present dictate that only one type of naturalize can be mystifyn for six months of the year. The country mustiness collect a decision as to whether they will value much from growing either wheat or rice. The political relation careful that it is significantly more profitable to grow and export rice so a decision is made to grow more rice. The opportunity cost of this decision is that there will be a decrease in the production of wheat resulting in an increase in the price of wheat products. Bibliography: Sloman, J & Norris, K. 1999, Economics, assimilator Hall, Australia.If you want to get a full essay, stag e it on our website: OrderEssay.net

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