The condition in which our wants are greater than the resources available to satisfy those wants and we are forced to make choices.
Example: Maria earns $1,000 a month. She wants to go shopping for new clothes, buy ten new books, take a trip to Hawaii, and buy a new car. Given her income, Maria cannot have all these things, she must make choices.
The most highly valued opportunity or alternative given up when a decision is made
The opp. Cost of buying a computer is taking a vacation Went on Vacation Bought a computer The opp. cost of watching TV is reading a book Read a Book Watched TV Opportunity cost What you would have done What you did
In economics, marginal means additional. Economists believe that when people make decisions, they do not think of the total costs and benefits involved in the decision. They need to think about the marginal, or additional costs and benefits.