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What is opportunity cost ? Explain with the help of a numerical example. |
| Answer» Solution :OPPORTUNITY cost is the next best alternative foregone in choosing the best one. SUPPOSE an economy produces only TWO goods X and Y. further suppose that by employing all resources fully and efficiently, the economy can PRODUCE 1X + 10 Y. if the economy decides to produce 2X, it has to cut down production of Y by 2 units because resources are limited. in this case opportunity cost of PRODUCING one more unit of X is 2Y. | |