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How does the concept of “opportunity cost” and the idea of “tradeoffs” relate to decision-making? Why does...

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Economics

How does the concept of “opportunity cost” and the idea of“tradeoffs” relate to decision-making?

Why does the term “opportunity cost of capital” mean?

What is “deciding on the margin”?

What is the difference between “positive economic analysis” and“normative economic analysis”?

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3.9 Ratings (563 Votes)
1 In both economic and noneconomic decisions individuals face the cost of opportunity One of the simplest ways to consider the costs of opportunity for an person is to consider a student choosing to study The student by deciding to study implicitly chooses not to go to a party hang out with friends or catch up on some muchneeded sleep The opportunity cost in this case is not easily represented in dollars and cents but is just as true The idea of trade offs due to scarcity is formalized by the idea of the cost of opportunity The opportunity cost of a option is the value of the best overlooked alternative In other words the opportunity cost of producing a bottle of water is the    See Answer
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