Topic 3 - Opportunity Costs & 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. 

Trade-offs

• 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.