Opportunity cost
What Opportunity cost means in Economics A-Level, as defined for AQA.
Definitions of Opportunity cost
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Reference: AQA
The amount of one good given up to produce another, found by dividing the maximum output of the given-up good by the maximum output of the good produced.
The basis of the model, being what is sacrificed to produce a good, with a country specialising where it is lower than its trading partner.
Moving along the curve demonstrates this, as producing more of one good requires sacrificing the other.
The cost of sacrificing one good to produce another, used to compare countries' relative advantages.
The sacrifice of one good required to produce more of another when moving along the curve.
The next best alternative foregone when choosing to allocate resources to one use.
Topics that use Opportunity cost
- Production possibility diagrams (AQA A-Level)
- Scarcity, choice and the allocation of resources (AQA A-Level)
- Trade (AQA A-Level)
Related terms
- Allocative efficiency
- Choice
- Comparative advantage
- Deadweight welfare loss
- Economic agents
- Economic decision-making
- Economic efficiency
- Economic growth
Using Opportunity cost in the exam
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