Increasing Opportunity Cost Flashcards, test questions and answers

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What is Increasing Opportunity Cost?

Increasing opportunity cost is a concept that has become increasingly relevant in today’s ever-changing economy. Opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen. In other words, it looks at what you give up when you make a particular decision. When opportunity costs increase, this means that the potential gains from making another choice are greater than those of the option chosen. One example of increasing opportunity cost is seen in the housing market. Due to rising home prices, people may have to forgo a larger house or more desirable neighborhood in order to stay within their budget. This would mean giving up some of the potential benefits associated with buying a bigger home or living in an ideal location. Another example of increasing opportunity costs can be seen in higher education; as tuition fees rise and scholarships become harder to come by, students may have to settle for a lower ranked school due to financial constraints. This could mean giving up some of the advantages associated with attending a top-tier university such as better job prospects and networking opportunities. Increasing opportunity costs can also be seen in labor markets; as wages remain stagnant while living expenses continue to climb, workers may find themselves unable to make ends meet due to lack of adequate pay and thus be forced into jobs with fewer benefits or shorter hours. This could mean missing out on important job training or experience which could lead to better career opportunities down the road. Increasing opportunity costs can present many challenges but they can also present opportunities for growth and development if individuals are willing to take risks and think outside the box when it comes to making decisions about their future possibilities.