Topic 3 - Opportunity Costs & Trade offs

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Opportunity Costs and Trade Offs.

Opportunity Costs

  • The cost expressed in terms of the next best alternative foregone or sacrificed. 
  • The true picture is, something is being sacrificed or involves having to give up something. 
  • For example, If you buy a £50 pair of shoes, you could be sacrificing going out with your friends during the weekend. 



  • Opportunity costs draw attention to the trade offs involved in making decisions.
  • As there are limited resources; we cannot have everything we want, so we have to make decisions in what we want most - This involves Trade offs. 



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i always get these two confused! thanks for explaining it :)

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