Unit 1.1 · What Is Economics? Scarcity, Choice, and Economic Models
Opportunity Cost and Free Goods
AO2
Syllabus Requirement
Explains the cost of any choice in terms of the next-best alternative foregone and distinguishes free goods from economic goods.
Assessment Objectives
AO2Application and Analysis
Summary
Opportunity cost is a key concept in economics that represents the value of the next best alternative forgone when making a choice. Due to the scarcity of resources, individuals, firms, and governments must make trade-offs, as choosing one option means giving up another. This understanding is essential for analyzing economic decisions and resource allocation.