Opportunity cost is the sacrifice made in making an economic decision, expressed in terms of the next best available alternative foregone. It is a central concept in economics, and if often regarded as the ‘true’ cost of an economic decision.
Using production possibility fontiers to explain opportunity cost
Labour markets The demand for labour - marginal productivity theory The demand for factors of production is derived from the demand for the products these factors help make. For example, if mobile phones are in greater demand, ...
Monopsony power Monopsony power exists when a single buyer or an association of buyers can dictate the prices they pay to suppliers, or control other aspects of the relationship that exists between themselves and their ...
Enterprise The origins of enterprise Firms start when entrepreneurs organise resources and take risks in the expectation of earning a profit. More specifically, enterprises tend to be set up for one or more of the following reasons: ...
Competitive labour markets The demand for labour - marginal productivity The demand for factors of production is derived from the demand for the products these factors make. For example, if mobile phones are in greater demand, then ...
Survival of small firms Despite the benefits of operating on a large scale, independent and non-subsidiary small and medium sized firms (SMEs) still survive, and indeed make up the vast majority of firms. According to ...