What do you mean by opportunity cost? |
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| Ans : Resources are limited so we cannot produce everything that we want. Therefore we are forced to make a choice. If we choose to produce more of one thing, it will be necessary to produce less of other things. The commodity that is sacrificed is the real cost of the commodity that is produce, this is known as opportunity cost.
For example, a producer can produce T.V set or computer. At a time, a producer can produce 10,000 units of T.V or 2500 units of computer. If producer decides to produce T.V it’s opportunity cost 2500 units of computer. On the contrary if a producer decides to produce computer, it’s opportunity cost is 10,000 units of T.V.
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