Macroeconomics
Explain the meaning of Opportunity Costs.
Opportunity Cost is what is given up to get something else. The opportunity cost of any given choice is the most valuable forgone alternative that is the best second alternative. The concept of opportunity cost was developed in the early 20th century by Friederich Wieser. Opportunity Cost is not assessed in monetary terms, but rather in terms of anything which is of value to the person doing the assessment. The consideration of opportunity costs is one of the key differences between the concepts of economic cost and accounting cost. Assessing opportunity costs is fundamental to assessing the true cost of any course of action. Opportunity cost is not the sum of the available alternatives, but rather of benefit of the best alternative of them. Any decision that involves a choice between two or more options has an opportunity cost.
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