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Microeconomics 20th Edition by McConnell, Sean Flynn, Stanley Brue
Edition 20ISBN: 978-1308221281Microeconomics 20th Edition by McConnell, Sean Flynn, Stanley Brue
Edition 20ISBN: 978-1308221281 Exercise 1
What is an opportunity cost How does the idea relate to the definition of economics Which of the following decisions would entail the greater opportunity cost: Allocating a square block in the heart of New York City for a surface parking lot or allocating a square block at the edge of a typical suburb for such a lot Explain. LO1
Explanation
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The opportunity cost of a commodity is the amount of another commodity that has to be sacrificed to get an additional unit of the commodity. For example, if three Compact discs are to be sacrificed for producing an additional unit of a DVD, then the opportunity cost of a DVD is three compact discs. Its price in the current use should be at least equal to its opportunity cost, otherwise it would move to its next best use.
Economics is associated with the optimal choices in the conditions of scarcity. This is true when the resources are limited in comparison to their availability. While making choices the concept of opportunity cost is essential, since it helps in deciding the value of the good produced by using the given resources.
Allocating a square in the heart of New York City for a surface parking lot has a greater opportunity cost, as compared to the same for allocating a square of block at the edge of a typical suburb. It is due to the fact the former could be put in to more valuable use as compared to the latter.
Economics is associated with the optimal choices in the conditions of scarcity. This is true when the resources are limited in comparison to their availability. While making choices the concept of opportunity cost is essential, since it helps in deciding the value of the good produced by using the given resources.
Allocating a square in the heart of New York City for a surface parking lot has a greater opportunity cost, as compared to the same for allocating a square of block at the edge of a typical suburb. It is due to the fact the former could be put in to more valuable use as compared to the latter.
Microeconomics 20th Edition by McConnell, Sean Flynn, Stanley Brue
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