What is another name for opportunity cost in economics ?

The correct answer is Economic Cost.

Key Points

• Economic Cost is another term for opportunity cost in economics, which refers to the value of the next best alternative foregone when a choice is made.
• It highlights the trade-off involved in decision-making, as resources are limited and choosing one option means forgoing others.
• Opportunity cost is used by economists to evaluate the true cost of actions, investments, or policies beyond monetary expenses.
• The concept of opportunity cost is central to microeconomic theory and helps in understanding resource allocation and efficiency.
• It is applicable across various domains, such as production, consumption, budgeting, and time management.

Additional Information

• Marginal Cost:
  • Marginal cost refers to the additional cost incurred to produce one more unit of a good or service.
  • It is calculated as the change in total cost divided by the change in quantity produced.
• Total Cost:
  • Total cost includes all expenses incurred in producing a certain quantity of goods or services.
  • It is the sum of fixed costs and variable costs.
• Economic Problem:
  • The economic problem arises due to limited resources and unlimited human wants.
  • It necessitates choices and prioritization in resource allocation.
• Trade-offs:
  • Trade-offs occur when choosing one option requires giving up another.
  • They are closely related to opportunity cost and are fundamental in economic decision-making.