ASSIGNMENT | How does the concept of “tradeoff” relate to “opportunity costs?”

You use economic concepts on a daily basis without even knowing it! When you decide whether or not to eat lunch at a restaurant or make a sandwich at home, you are making a decision based on the costs and benefits of those options. Economists use these same basic tools to examine economic issues. Think about one choice you made in the past several days and explain how this could be analyzed using economic concepts such as tradeoffs, opportunity costs, and marginal analysis.

Discussion Checklist:

How does the concept of “tradeoff” relate to “opportunity costs?”
What is the difference between monetary and non-monetary opportunity costs?
Why are opportunity costs based on a person’s tastes and preferences?

SAMPLE SOLUTION

How does the concept of trade-off relate to opportunity cost?
Every choice one makes in life has open and hidden costs. Purchasing a bike costs one $45, but they are also foregoing the possibility of purchasing something else, and they can spend that $45 again. Each decision made means another option has been foregone. A trade-off is the exchange of one thing for another or taking less of one thing for more of another. For instance, I had to choose between going to a close-by college so…