Basic Concept of Economics – Opportunity Cost

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Topic Content:

Basic Concept of Economics
- Opportunity Cost/Real Cost
- Importance of Opportunity Cost
- The Difference between Opportunity Cost and Money Cost

5. Opportunity Cost/Real Cost:

Opportunity cost is the alternative forgoneThe alternative forgone on the scale of preferences is known as Opportunity Cost. The opportunity cost shows the alternate opportunities missed by the individual in choosing a certain preferred alternative. More , in order to satisfy the most important needs/wants. It refers to the sacrificed alternative. It is the need that is left unsatisfied, in order to satisfy another, more pressing, need and is referred to as Real Cost.

Mrs Shittu has ₦2500 and has the need for both food and clothes, which cost ₦1800 and ₦1600 respectively. Of course, she cannot buy both so, she will have to forgo

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SS1: ECONOMICS - 1ST TERM

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