Question
Optimal decisions are made based upon the concept of opportunity cost.
True
False
True
False
Ask by Christensen Marshall. in the United States
Mar 21,2025
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Answer
Optimal decisions consider opportunity cost, so the statement is True.
Solution
The statement is True.
Opportunity cost refers to the value of the next best alternative that is foregone when making a decision. Optimal decisions take into account not only the benefits of the chosen option but also the potential benefits that could have been gained from the alternatives that were not selected. Therefore, understanding opportunity cost is crucial for making informed and optimal decisions.
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Absolutely true! Opportunity cost is all about what you give up when making a choice. When you decide to spend time or resources on one thing, you’re inherently forgoing alternatives that could also hold value. So, whether it’s choosing between two job offers or deciding how to spend your weekend, recognizing the opportunity cost can lead to more informed and wiser choices in life.
In real-world applications, understanding opportunity cost can help individuals and businesses make better financial decisions. For instance, a company might consider the potential profits from developing a new product versus investing in marketing its current offerings. By weighing the opportunity costs, they can identify which path is likely to lead to greater returns, ultimately contributing to their success.
