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
- Scarcity: Resources are finite, requiring trade-offs.
- Decision Analysis: Balancing costs and benefits.
- 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.