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case: The average people in a country use about 20 barrels of oil each year in...

case:
The average people in a country use about 20 barrels of oil each year in a country. And the usage of this commodity is not avoidable. This is one of the important parts of our expenditure, and this is the commodity where the price will change quite often.
Years before, around 2010 there were a long period of high prices. And this affects the largest
part of this sector, production stopped because of the hike in prices and the demand side got the final effect. To manage this situation, the government provides funds for research, to identify the source of reducing the production cost so as to fix low price.
The period of high prices affects the oil industry a lot and they decided to increase the supply.



Q:
Describe the opportunity cost towards research and what are the opportunities forgone?
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Answer #1

Opportunity cost is the cost of losing the opportunity of employing the resource in its next best use. Opportnuity cost towards research may mean the cost of losing the opportunity of employing the resources to do research somewhere else where it could have provided benefit. Opportunity cost of research can be that the money could be used in developing more efficient technologies or subsidising the industry so that they could bear high oil price and fix the product price at lower levels so demand and supply dont get affected.

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