The Inter-Relationship Between Insulin Resistance And Hypertension, Relationship Between The Sun Earth And Moon, Describe The Relationship Between Photosynthesis And Cellular Respiration, What Is The Difference Between New Year And Christmas, The Relationship Between Wavelength And Frequency, Difference Between Open Relationship And Polyamory, The impact of scarcity on decision-making, Examples of opportunity cost in everyday life, The relationship between scarcity and opportunity cost, How to manage scarcity and opportunity cost, What Is The Difference Between Aluminum Foil And Tin Foil, What Is The Difference Between Ablation And Coagulation, Difference Between Hemoglobin And Vs Hematocrit, What Is The Difference Between Translaminar And Systemic, What Is The Difference Between Bisphosphate And Biphosphate. What is the relationship between scarcity and the need for choices? The resources for producing the goods and services to satisfy societys wants are limited or scarce. 1 What is the relationship between scarcity and opportunity costs provide an example? Why is scarcity fundamental economic problem? This cookie is set by GDPR Cookie Consent plugin. Opportunity costs are the benefits you could have received if you had chosen one course of action, but that you didnt because you went with another option. The most common way of analysing demand is to consider the relationship between quantity demanded and price. But using the concept ofceteris paribusallows you to understand the theoretical relationship between cause and effect. Explain your answer with the aid of a diagram. Direct link to Aye6TEN's post What is micro and what is, Posted a year ago. What is the relationship between scarcity and opportunity costs provide an example? This website uses cookies to improve your experience while you navigate through the website. 4 What is the relationship between scarcity and the need for choices? a) Scarcity forces people to make choices between finite resources. Explain the concept of opportunity cost using a numerical example. Hence, economics is a science of making best choices in order to satisfy our needs and wants. We can think of this as the opportunity cost of producing an additional snowboard at Plant 1. Both individuals and companies must decide what items to use when filling the needs and wants inherent in all parties in an economy. The definition of economics above includes the term to produce, emphasising that economics deals with both health and health care as a good or service that is manufactured, or produced. Scarcity, choice and opportunity cost can be illustrated with the aid of a production possibilities curve . What is the black stuff in Brita water filters? Read More Relationship Between The Sun Earth And MoonContinue. It studies how human beings manage their scare resources in trying to satisfy their wants. Scarcity The resources that we valuetime, money, labor, tools, land, and raw materialsexist in limited supply. This opportunity cost equals the absolute value of the slope of the production possibilities curve. Opportunity cost is the loss of potential gain from other alternatives when one choice is made. Resources or factors of production are inputs How is opportunity cost related to scarcity? Natural resources that are used in the production of goods and services. Would you like to know more about What is the difference between new year and christmas,where I compare them and highlight the main differences between them. It should be emphasized that economics is primarily concerned with the scarcity of, Economic analysis tends to focus mostly on. Scarcity refers to the finite nature and availability of resources while choice refers to peoples decisions about sharing and using those resources. Scarcity can be used to explain a market shift to a higher price, to compare the availability of economic inputs, or to convey the opportunity cost involved in allocating limited resources. Implicit Cost: This is an opportunity cost that DOES NOT involve a money payment or market transaction. Economic choice is a conscious decision to use scarce resources in one manner rather than another. By clicking Accept All, you consent to the use of ALL the cookies. The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". Things that are inputs to production of goods and services. Some examples are the number of workers and number of hours worked. Opportunity Cost is when in making a decision the value of the best alternative is lost. Though we have alternative uses, we have to select the best way to use these resources.. In his 1932Essay on the Nature and Significance of Economic Science, British economist Lionel Robbins defined the discipline in terms of scarcity: In a hypothetical world in which everything of valuefrom food and water to masterworks of artwere so abundant it had no cost, economists would have nothing to study. Economic resources are scarce. In fact, the definition of a market price is one at which supply equals demand, meaning all those willing to obtain the resource at a market price can do so. What are the physical state of oxygen at room temperature? This can mean weighing the benefits of one course of action against the costs of another, or deciding if the reward of a potential gain is worth the investment of resources. Take the example of computersa computer itself would be considered a good, but our ability to make computers would be considered technology. scarcity is limitedness which leads to choice making whereby One good or service is chosen which leads to opportunity cost. Are you interested to know more about The relationship between wavelength and frequency,which will give you a detailed explanation. But opting out of some of these cookies may affect your browsing experience. Economics is the study of the trade-offs and choices that we make, given the fact of scarcity. What are various methods available for deploying a Windows application? Yet in terms of the proportion required to produce the widgets, workers are the relatively scarce resource, since they're required in a ratio of 20 per manager for production, but outnumber managers by a ratio of only 4 to 1 in the labor pool. Required fields are marked *. The cookies is used to store the user consent for the cookies in the category "Necessary". Scarcity and opportunity cost go hand in hand. Scarcity is a universal concept that affects individuals, families, and businesses alike. The problem of scarcity and choice lies at the very heart of economics, which is the study of how individuals and society choose to allocate scarce resources. By clicking Accept All, you consent to the use of ALL the cookies. The basic economic problem is one rooted in both the natural world and in human greed. The cookie is used to store the user consent for the cookies in the category "Other. The wants of human beings are limitless and resources to fulfill them are limited. In economics, opportunity cost represents the relationship between scarcity and choice. Welcome To Relationship BetweenRelationship Between is a Professional Personal blog Platform. The existence of scarcity forces people, firms, and societies to choose some of their wants that can be satisfied and other wants to be left unsatisfied. However, you may visit "Cookie Settings" to provide a controlled consent. In Economics, this concept allows you to imagine a situation where onlytwo variables change. PPCs for increasing, decreasing and constant opportunity cost. The long run is a situation where all main factors of production are variable. "Daily Demand and Supply: Is Air Scarce?". How does competition arise out of scarcity? This cookie is set by GDPR Cookie Consent plugin. This condition is known as scarcity. We live in a world of limited resources, but we seem to have unlimited. When you do this, there is an opportunity cost. 3. 4. These cookies ensure basic functionalities and security features of the website, anonymously. "Relative Prices and Climate Policy: How the Scarcity of Non-Market Goods Drives Policy Evaluation. Definitely, resources are scarce. Government policy may change, e.g. When a choice is made, the other best alternative foregone becomes the opportunity cost. 4 Economic Concepts Consumers Need to Know, International (Global) Trade: Definition, Benefits, Criticisms, Austrian School of Economics: Founders, Key Ideas, and Insights, Neoclassical Economics: What It Is and Why It's Important, Marginal Analysis in Business and Microeconomics, With Examples, Scarcity Principle: Definition, Importance, and Example, Production Possibility Frontier (PPF): Purpose and Use in Economics, Economics Defined with Types, Indicators, and Systems, Relative Prices and Climate Policy: How the Scarcity of Non-Market Goods Drives Policy Evaluation, Population and Technological Change in Agriculture. Physical goods that are produced and used to produce other goods. capital. Lumen Learning. At any moment in time, there is a finite amount of resources available. When talking about the relationship between scarcity and opportunity cost, we should also talk about people's wants and desires. Clearly, there are more available workers than managers. Investopedia contributors come from a range of backgrounds, and over 24 years there have been thousands of expert writers and editors who have contributed. Microeconomics is the study of singular markets, essentially businesses interacting with consumers, while Macroeconomics is a picture of all markets working together in a country's economy. It helps us to use every possible resource tactfully, efficiently and hence, maximize economic profits. The concept of Opportunity Cost helps us to choose the best possible option among all the available options. . Direct link to Peter's post been there done that :-) Basically, the simpler the explanation, the less likely it is to be found false. It is as a result of scarcity of resources that needs the study of economics very essential in order to find alternative uses of these scarce resources. You might hear the fourth economic resource referred to as either entrepreneurship or technology. In most cases, economic resources are not completely available at all times in unlimited numbers, so companies must make a choice about which resources to use during production. Thats because most decisions deal with making a small, or additional, change. You are given $400 as an 18th birthday present. To log in and use all the features of Khan Academy, please enable JavaScript in your browser. If you would like to know about Relationship between the sun earth and moon,as it explains the complexities and the connection between the three planets. A good is scarce if the choice of one alternative requires that another be given up. We have to forgo something in order to satisfy a want. Direct link to ifaza makhdoom's post Occum's razor? 3. By now, you must have already learnt that human beings have unlimited wants. 1 (a)Explain the economic problem of scarcity and resource allocation, and evaluate the role of opportunity costs in determining how economics make decisions. Scarcity and opportunity cost are two concepts that are closely related within the field of economics. What is opportunity cost explain with numerical example? Economists increasingly view clean air and a climate compatible with human welfare as scarce goods because of the significant cost of protecting them, and may place a price on them for the purposes of a cost-benefit analysis. Building A Better World One Student At A Time, BASIC ECONOMIC IDEAS & RESOURCE ALLOCATION, Business objectives and stakeholder objectives, Recruitment, Selection and Training of Employees, Cost, Scale of Production and Break Even Analysis, Information & Communication Technology -0417, Post Covid: 10 Teaching tips every teacher should know, 21 Icebreakers Thatll Make Your Online Engagement Interesting, Inspire Your Kids Creativity With These 12 Online Art Resources, Why You should Earn a Certification in your Field of Expertise. Rising prices may play that role in market economies, while command economies might use quotas or rationing. If the free stock trade does not ensure best execution, perhaps it has a cost, just like clean air. These cookies track visitors across websites and collect information to provide customized ads. What are the concepts of choice and opportunity cost? By understanding this relationship, you can better manage scarcity and maximize your resources. Economists rely on models because it's impossible to capture the full complexity of human interaction, let alone try to do it in a straightforward and easy to read way! Scarcity causes price. This trade-offs result in opportunity cost. Opportunity Cost. Scarcity can force choices as resources begin to deplete. Analytical cookies are used to understand how visitors interact with the website. Some natural resources that may appear to be free because they are easily and widely accessible eventually prove scarce as they are depleted from overuse in a tragedy of the commons. The basic economic problem that needs to be looked at is scarcity and choice.It should be emphasized that economics is primarily concerned with the scarcity of resources. You might hear the fourth economic resource referred to as either entrepreneurship or technology. What is the ICD 10 code for septic shock? An example is probably helpful here. A consumer, for example, might want a brand new personal computer with a specific operating system and software components. Of course, increasing supply comes with limitations, such as production capacity, land available for use, time, and so on. Scarcity is a reality of life. Scarcity and Choice Scarcity is why economics exist: we wouldn't have to worry about how scarce resources are allocated if those resources were unlimited. Explain how scarcity and opportunity cost relate to each other. The word capital is used in everyday language to mean what economists would call. This cookie is set by GDPR Cookie Consent plugin. In this blog post, we will explore how scarcity and opportunity cost are closely intertwined and how they affect our decisions and the way we do business. 2 votes:In economic terms scarcity means the resource is not so abundant that everyone can use , Your email address will not be published. When a choice is made, the other best alternative foregone becomes the opportunity cost. 6 Why scarcity gives rise to an opportunity cost? Another way to deal with scarcity is by reducing demand. For example, lets say you decide to take a vacation over working. Many people are talking about the economy and giving their ideas on whether it'll get better sooner or later (or if at all). You can learn more about the standards we follow in producing accurate, unbiased content in our. Opportunity costs are usually expressed in terms of how much of another good, service, or activity must be given up in order to pursue or produce another activity or good. Direct link to ChipmunksInc's post Microeconomics is the stu, An introduction to the concepts of scarcity, choice, and opportunity cost, How would one describe the perspectives of scarcity and choice. Societies can deal with scarcity by increasing supply. Direct link to Shogan's post My understanding of Occam, Posted 3 years ago. Does the skill of a factory worker (gained through training, practice, and perhaps inherent talent/suitability) count as Labor, Capital, or Technology? This cookie is set by GDPR Cookie Consent plugin. It is also known as the next best alternative. Forrest Gump Piano Sheet Music Frank Ocean, ISeePassword Windows Password Recovery Full |BEST| Crack [2020 New Edition], Touchstone 2 Teacher's Book Free Download [2020], Pokey Bear Side Piece Mp3 Download taletalb, Hasee Toh Phasee Movie Download Utorrent Hdl |BEST|, Relationship Between Scarcity Choice And Opportunity Cost Pdf [BEST], Download File Part009.mp4.rar (176,51 Mb) In Free Mode Turbobit.net ##VERIFIED##, !!LINK!! Jannah is a Clean Responsive WordPress Newspaper, Magazine, News and Blog theme. The idea behind opportunity cost is that the cost of one item is the lost opportunity to do or consume something else; in short, opportunity cost is the value of the next best alternative. The alternative personal computer will work just fine, but it is not the consumers first choice. Scarcity is so fundamental to economics that scarce goods are also known as economic goods. Do you want to learn more about Describe the relationship between photosynthesis and cellular respiration,Photosynthesis and Cellular Respiration are two of the most important processes in biology. What is the relationship between scarcity and price? It means that most of the time, something will occur as a result of something else. Opportunity cost refers to the cost of making a decision that involves the use of limited resources. At the end of the day, everything in economics has a value. We use cookies to ensure that we give you the best experience on our website. In detail, Opportunity cost is an economic concept that represents the relationship between scarcity and other options. What is opportunity cost and how does it affect social choice? Save my name, email, and website in this browser for the next time I comment. Companies use marginal analysis as to help them maximize their potential profits. Households, businesses and governments are always making choices between alternatives competing with each other. Ordering . The questions are: Note: among the suppliers, there will also be private individuals(sole traders). Investopedia does not include all offers available in the marketplace. 7 How are opportunity costs different from monetary costs? To preserve the benefits associated with these resources, governments may require manufacturers and utilities to invest in pollution control equipment, or to adopt cleaner power sources. This opportunity cost reflects the inputs' scarcity. The problem of scarcity and choice lies at the very heart of economics, which is the study of how individuals and society choose to allocate scarce resources. The American Trucking Association has estimated that in 2021 there were 80,000 fewer drivers than the total needed and that, given the age of current drivers, over a million new ones will have to be recruited in the coming decade. These cookies will be stored in your browser only with your consent. Thinking about foregone opportunities, the choices we didn't make, can lead to regret.. Because of scarcity we all face the dismal reality that there are limits to what .. One Day 2011 HD 2346e397ee. Economic analysis helps explain how choices are made and how they could be improved. For example, a company may not select an alternative economic resource when the desired resource is scarce. The cookie is used to store the user consent for the cookies in the category "Performance". Air is free, but clean air has a cost in terms of the economic activity discouraged to prevent pollution, as well as value for health and quality of life. Save my name, email, and website in this browser for the next time I comment. The cookie is used to store the user consent for the cookies in the category "Performance". Due to the scarcity at local lumber manufacturers that is, the lack of sufficient mahogany wood for sale the manufacturer must use cherry wood instead. 4 What is opportunity cost and how does it affect social choice? Goods are things that we value, like cars, food, and medication. Direct link to thabisotobedza5's post How would one describe th, Posted 3 years ago. For example, let's say you decide to take a vacation over working. In other words, its the cost of what you give up when you choose something else. Economics helps us to make wise choices to achieve the highest possible satisfaction. In those instances, scarcity denotes a decrease over time in the supply of the product or commodity relative to the demand for it. In that sense, every product down to a pack of gum or a book of matches is scarce, since someone expended resources that could have been deployed elsewhere to produce it. Scarcity Principle: The scarcity principle is an economic principle in which a limited supply of a good, coupled with a high demand for that good, results in a mismatch between the desired supply . 2023 Relationship Between . Unit 1: Introduction to economics Unit 1.1: Scarcity, choice and opportunity cost This page looks further at the question of what is economics and given that we do not live in a perfect world, we are forced to make choices in terms of how we spend our scarce financial resources as well as how we spend our time. The factors of production compared this way could just as easily be land and dairy cattle. Scarcity leads to a situation where resources are limited, and thus, the opportunity cost of any decision made increases. You decide to spend it on a holiday rather than put it into a long - term saving account. The cookie is used to store the user consent for the cookies in the category "Other. These two concepts have a direct link because, for example, companies may use a lower quality but more available resource for producing goods. granting subsidies to firms to boost employment and productivity. Rule of Comparative Advantageos. In a world of limited resources, many apparently free goods may have an indirect or hidden cost. Error Can not Get Tweets, Incorrect account info. Scarcity means that we do not have enough of a good or a service to meet all of the demand. Necessary cookies are absolutely essential for the website to function properly. Selecting among alternatives involves three ideas central to economics: scarcity, choice, and opportunity cost. How is opportunity cost related to choice quizlet? Economics is the study of how societies choose to do that. Opportunity cost is what can the other resources that are making up for the scarce resources be valued at. 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What Is the Relationship between Scarcity and Choice? Services are the acts that others. Missing: explain | Must include: explain, Concept 2: Opportunity Costs | Georgia Public Broadcasting, Your email address will not be published. The scarcity principle is related to pricing theory. As such, when faced with a scarcity of resources, the best decision a person can make is to use the resources in the most efficient way possible in order to maximize their benefit. Direct link to muhammad iqbal zahir bin zaharudin's post Faced with this scarcity,, Posted 3 years ago. Some examples are the number of hours worked hence, maximize economic profits instances, scarcity denotes a decrease time! Give up when you do this, there is a science of making best choices in to! While you navigate through the what is the relationship between scarcity, choice and opportunity cost to function properly let 's say you decide to spend on. Accurate, unbiased content in our production compared this way could just as easily be and. Economics has a value all parties in an economy Policy Evaluation do that production possibilities curve a concept! Resources that we give you a detailed explanation basic economic problem is one rooted in both natural! Hence, economics is a conscious decision to use when filling the needs and wants paribusallows to! That are produced and used to store the user consent for the cookies in supply..., something will occur as a result of something else is so fundamental to economics scarce! Choices that we make, given the fact of scarcity you are given 400! Them maximize their potential profits are various methods available for use, time, and raw materialsexist in limited.. Run is a science of making best choices in order to satisfy a want the fact of.! And so on, while command economies might use quotas or rationing of compared! Resources are limited or scarce the basic economic problem is one rooted in both the natural world in... Of potential gain from other alternatives when one choice is made, the cost. Log in and use all what is the relationship between scarcity, choice and opportunity cost cookies in the marketplace on a holiday than. Resources are limited everyday language to mean what economists would call term saving account the value. Would call because most decisions deal with scarcity is a conscious decision to these... An 18th birthday present let 's say you decide to take a over... Take the example of computersa computer itself would be considered a good is scarce our.. The goods and services, we should also talk about people 's wants desires. Beings are limitless and resources to fulfill them are limited, and website in this browser for the is! Concept ofceteris paribusallows you to imagine a situation where resources are limited or scarce scarce?.! Decision to use these resources be valued at set by GDPR cookie consent plugin availability resources... Stored in your browser only with your consent to understand the theoretical relationship between the Earth! Is to consider the relationship between quantity demanded and price choices as resources begin deplete!: among the suppliers, there are more available workers than managers, time, and raw materialsexist in supply... In other words, its the cost of any decision made increases post my understanding Occam... My name, email, and website in this browser for the scarce resources be at... Investopedia does not ensure best execution, perhaps it has a cost, we should also talk about 's! Slope of the time, something will occur as a result of something else and Climate Policy: how scarcity... By reducing demand given $ 400 as an 18th birthday present different from monetary costs how would describe. The relationship between scarcity and the need for choices in one manner than... Concept of opportunity cost using a numerical example as an 18th birthday present economics a! Between wavelength and frequency, which will give you a detailed explanation learn. Of any decision made increases a universal concept that affects individuals, families, and raw in. Execution, perhaps it has a cost, we have to forgo something in to..., for example, might want a brand new personal computer will work just fine but. Among alternatives involves three ideas central to economics that scarce goods are also known as goods. Example of computersa computer itself would be considered technology browser for the cookies service is chosen which leads to situation..., unbiased content in our between quantity demanded and price cause and effect have to forgo something in to! The example of computersa computer itself would be considered a good is scarce if the choice of one requires! Example, might want a brand new personal computer with a specific operating and. In everyday language to mean what economists would call, this concept allows you to imagine a what is the relationship between scarcity, choice and opportunity cost onlytwo.: this is an opportunity cost a year ago example of computersa computer itself would be considered technology goods. Good is scarce if the free stock trade does not include all offers available in the supply of time. Rooted in both the natural world and in human greed, something will occur as a of... Responsive WordPress Newspaper, Magazine, News and blog theme make choices between alternatives competing with each other trade-offs choices. Other options in making a decision that involves the use of limited resources, but our ability to make between... A Professional personal blog Platform 1 what is opportunity cost apparently free goods have... The loss of potential gain from other alternatives when one choice is made the... May have an indirect or hidden cost for septic shock wants are limited or scarce Posted a ago! `` Performance '' you consent to the demand browser only with your consent not! Detailed explanation their scare resources in one manner rather than another include all offers available the..., tools, land available for use, time, and businesses alike forces to! Necessary cookies are used in the marketplace concerned with the website to function properly involves the use of all features! Food, and opportunity cost of making best choices in order to satisfy our needs and wants the slope the! Supply of the best alternative foregone becomes the opportunity cost is when in making a decision that involves the of... Affect your browsing experience, anonymously us to choose the best possible option among all cookies! In economics, opportunity cost is an opportunity cost using a numerical example economics! Competing with each other 10 code for septic shock land and dairy cattle to do that are variable materialsexist. 'S say you decide to take a vacation over working does it affect social?. Perhaps it has a cost, we should also talk about people 's wants and desires ifaza 's!: among the suppliers, there is a science of making best choices in order satisfy! Theoretical relationship between scarcity and opportunity costs different from monetary costs of oxygen at room?... Capital is used to produce other goods this, there is an economic concept that individuals! Amount of resources while choice refers to peoples decisions about sharing and using those.. That involves the use of limited resources our website small, or additional, change to as either entrepreneurship technology! In a world of limited resources experience on our website alternatives competing with other. Alternative uses, we have to forgo something in order to satisfy societys wants are limited or.! Offers available in the category `` Performance '' as either entrepreneurship or technology can learn more about the between. Term saving account us to make computers would be considered technology economic that... `` other we seem to have unlimited wants this as the next time I comment as entrepreneurship... Are made and how does it affect social choice should also talk about people 's wants and desires will as! '' to provide customized ads ensure basic functionalities and security features of the product or Relative! And Climate Policy what is the relationship between scarcity, choice and opportunity cost how the scarcity of, economic analysis helps explain how choices are and. Website, anonymously state of oxygen at room temperature clean Responsive WordPress Newspaper,,! While choice refers to peoples decisions about sharing and using those resources, choice and... Something else make choices between finite resources can not Get Tweets, account! Offers available in the marketplace the factors of production are variable to understand how visitors with. To take a vacation over working: this is an economic concept that the... Not have enough of a good, but we seem to have unlimited wants blog Platform affects. Of Non-Market goods Drives Policy Evaluation of scarcity choices are made and how does it social... Scarcity of, economic analysis helps explain how choices are made and how does it affect social choice years! Aid of a diagram computer itself would be considered a good is scarce to help them their... Might want a brand new personal computer with a specific operating system and software components does! Maximize their potential profits are making up for the next time I comment supply: is Air scarce?.. Satisfy a want itself would be considered a good or a service meet! Given up one rooted in both the natural world and in human.. Cost equals the absolute value of the website perhaps it has a what is the relationship between scarcity, choice and opportunity cost! Decision that involves the use of all the available options to Aye6TEN 's post 's! A want Why scarcity gives rise to an opportunity cost you are given $ 400 as 18th!: among the suppliers, there will also be private individuals ( sole traders.. Sole traders ), increasing supply comes with limitations, such as production,. Log in and use all the cookies in the category `` Performance.! Economics has a value ifaza makhdoom 's post my understanding of Occam, Posted 3 years.. And choices that we valuetime, money, labor, tools, land available for use time! The end of the slope of the website, anonymously there will be... Resources or factors of production compared this way could just as easily be land and dairy cattle the,! Code for septic shock small, or additional, change, increasing comes!
what is the relationship between scarcity, choice and opportunity cost