supply and demand
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1.) We make choices as consumers every day. Opportunity cost is defined as a person's "next best alternative" or "the cost of what you give up when you make a choice."
Think of a recent decision you made regarding your career. What was your opportunity cost for making that choice? What was your "next best alternative"?
2.) Explain why housing prices vary from city to city. For example, topeka, kansas, vs concord, Massachusetts, vs san francisco, ca, etc. Clearly explain how supply and demand affect the prices of the homes.
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This posting explains how supply and demand affect the prices of the homes.
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OPPORTUNITY COST PRINCIPLE
The opportunity cost or alternative costs are the returns from the second best use of the organization's resources or here in this case the individual's capability.
For example a farmer who is producing wheat can also produce potatoes with the same factors.
Therefore the opportunity cost of a quintal of wheat is the amount of output of potatoes given up.
In Economics, The opportunity cost of anything is the next best alternatives that could be produced instead by the same factors, costing the same amount of money. The opportunity cost thus are the costs of sacrificed alternatives. A machine can produce either X or Y. The opportunity cost of producing a given quantity of X is the given quantity of Y which it would have produced.
Therefore it should be remembered that
? All decisions involve choice must involve opportunity cost calculation.
? The opportunity cost may be either real or monetary, either implicit or explicit, either quantifiable or non quantifiable.
Opportunity costs' relevance is not limited to individual decisions. They are also relevant to government decision, which affect everyone in the society. A common example is gun vs butter debate. The resources that society has are limited therefore its decisions to use those resources to have more guns (more weapons) means that it must have less butter (fewer consumer goods). Thus when society decides to spend $100 million on developing a defense system, the opportunity cost of that decision is $ 100 million not spent on fighting drugs, helping the homeless or paying off some of the national debt.
For many of the choices the society makes opportunity costs tend to increase as we choose more and more of an item. Such a phenomenon about choice is so common in fact that is ...
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