Answer to Question #292239 in Economics for Aman

Question

When alice went to theatre she had to choose between romantic and action movie.she decided to watch romantic movie.Did alice face any scarcity in this situation?economically,what conclusions can be withdrawn from alice choice of romantic movie over action movie?

Answer 1

In the described case Alice faced issues of scarcity and an opportunity cost.

Scarcity refers to when the demand for a resource is greater than the supply of that resource, as resources are limited.

Opportunity cost is the value of the next best thing you give up whenever you make a decision.