Opportunity Cost

EconomicsDecision MakingScarcity

Opportunity Cost represents the value of the next best alternative that must be forgone to pursue a particular action.

Introduction

Opportunity Cost represents the value of the next best alternative that must be forgone to pursue a particular action.

Core Principles

  1. Scarcity: Resources are finite, requiring trade-offs.
  2. Decision Analysis: Balancing costs and benefits.
  3. Contextual Evaluation: Opportunity costs differ based on situational factors.

Applications

  • Investment strategies to maximize returns.
  • Time management for prioritizing tasks.

Related Resources

  • Tools: Opportunity cost calculators.
  • Book: "Economics in One Lesson" by Henry Hazlitt.

Related Topics

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