Opportunity cost

Key words:

Opportunity cost: the best alternative forgone

Opportunity cost is the cost of a decision in terms of the best alternative given up to achieve it

Opportunity cost and consumers

• consumers re buyers and users of goods and serivces

• most of us cannot buy everything we like

• the closer the 2 products are in quality and price, the harder the choice becomes

Opportunity cost and workers

• an individual working one job involves an opportunity cost

• the job that a worker chooses depends on wage paid, chances of promotion and the job satisfaction to be gained

Opportunity cost and producers

• producers have to decide what to make

• in deciding what to produce, private sector firms will tend to choose the option which will give them maximum profit

• this will involve the firm considering the demand for different products and the cost of producing those products

Opportunity cost and the government

• the government has to carefully consider its expenditure of tax revenue on various things