Question

What is an opportunity cost? How does the idea relate to the definition of economics? Which of the following decisions would entail the greatest opportunity cost? Example allocating a square block in the heart of the Toronto for surface parking lot or allocating a block at the edge of typical subrub for a lot? Explain.

Answer 1

Opportunity cost is the amount of other products that must be forgone or sacrificed to produce a unit of product.

Economic costs for instance relates to opportunity cost in the aspect that the payment must be made to obtain and retain the services of a resource.

The New York City square block would have a greater opportunity cost because it would just cost more money than it's worth to change the lots of the already existing lot.