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What is opportunity cost? Explain a situation in which two people would have different opportunity costs...

What is opportunity cost? Explain a situation in which two people would have different opportunity costs for engaging in the same action.

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Answer #1

Opportunity cost is the next best alternative that the person gave up for doing other task. For example, we had an opportunity to do home works on the weekend or party. We decide to party, then the opportunity cost of party is homework.

Situation where tow different people have different cost for engaging in the same action is when the two people value the same thing differently. For example, Will smith gets its lawn mowed. The opportunity cost for Will smith is high as compared to the opportunity cost to the person he can hire for mowing his lawn, If Will did this job on his own he might miss shooting for his new movie but the person who he has hired missed then he will only lose a day wage.  Work is same i.e. mowing lawns but the opportunity cost are different.

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