THE EXAMS POINTHow scarcity creates opportunity cost
Begin at the centre. Explore a branch, explain its connection, then test your recall. Tap any branch heading to fold or expand it.
In recall mode, focus or tap a branch to reveal its explanation. Numbered branches follow a simplified process; read them in order.
How scarcity creates opportunity cost
01 · Resources are limited
Time, land, labour or capital cannot meet every competing use.
02 · Choose an alternative
Select one feasible use of the available resources.
03 · Identify the next-best option
Consider the best feasible alternative given up.
04 · Measure the sacrifice
Its value is the opportunity cost of the chosen action.
Connect the branches
Only the next-best alternative forgone is counted; do not add every rejected option.
Avoid the exam trap
An explicit money payment and opportunity cost are not necessarily the same.
Test yourself: If your best alternative to teaching an hour is paid consulting, what is the relevant sacrifice?
The value of the best consulting opportunity forgone, together with other relevant opportunity costs; not the sum of all possible activities.
A concise revision aid with simplified connections. It supports the full chapter and primary references; it does not replace them.