What Is The Importance Of Opportunity Cost In Economics?

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colm debhuin Profile
colm debhuin answered
Opportunity cost is the cost of forgone alternatives.
Its importance: It helps make accurate resposible suggestions for the allocation of scarce resources into the economy

the broad answer above with the irelevent example doesn't actually outline the IMPORTANCE of opp' cost.
Anonymous Profile
Anonymous answered
Opportunity cost is an important element in maximising social benefit. Suppose there are two agents deciding whether or not to commit to a transaction, each agent will want to maximise their potential benefit given their constraints. For example, a consumer may want to maximise their utility whilst the producer wants to maximise their profit. An important factor in this constraint will be the next best return on the funds that will be devoted to the transaction; the opportunity cost. If either agent can earn a better return by allocating their resources elsewhere then there remains the capacity for further trading between the agents exists (i.e. They should change the terms of the transaction) or else the agent should invest his resources where the return is the highest. If the opportunity cost of resources is not taken into account inefficient allocations of resources will be made, which is costly to society.
saba yousuf Profile
saba yousuf answered
Opportunity Cost is very important in economics, its how you can make more profit from minimum cost.
Doug West Profile
Doug West answered
Opportunity cost is what occurs based on decisions made during the course of business. If you decide to purchase x for $1000 which will make you a profit of 30% then later you may not be able to take advantage of purchasing y for $1000 and making a profit of %50. This can equate to time, purchases, taleent etc. Each time you make a decision you need to weigh the opportunity cost. You maybe to busy or unable to handle other things that could cost you $ in the future.

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