Opportunity Cost of Production
Opportunity Cost of Production The true cost of something is what you give up to get it. ... Going for a walk may appear to cost nothing, until you consider the opportunity forgone to use that time earning money. Everything you do has an opportunity cost. Economics is primarily about the efficient use of scarce resources, and the notion of opportunity cost plays a crucial part in ensuring that resources are indeed being used efficiently. ... Because they cannot increase the number of inhabitants on their island, then their labour is scarce factor of production. ... Increasing production of one type of goods lowers production of another type of goods; it is called opportunity cost of production. ... That kind of production is possible, but is not efficient. ... They can choose one of three possibilities and by this; they will decide how the production will be.