One method for studying opportunity cost is to think in terms of:?

One method for studying opportunity cost is to think in terms of:?

(i) Trade-Offs.

(ii) Pros and cons.

(iii) Trial and error.

(iv) Cause and effect.

Answer: The correct options are (i) and (ii).

Opportunity cost in its simplest form requires one to appreciate the implication of a choice shortcoming as bearing a price. Scholars have argued that when one decides on one course of action, then automatically he says no to other options available. This concept is well captured by analysing what you will gain out of any decision against what you will lose in the process. Likewise, analysis of the benefits and losses of each choice assists in comparing the quantity and quality of the choice with that of next best option, making the opportunity cost more concrete. For example, deciding to buy a share means giving up on placing money in a safe account giving fewer returns; one can see the advantages (higher return rates are possible) and disadvantages (the rates may be lowered by risks) at once. These approaches enable a better decision-making process since real costs on our decisions are brought to the surface.