6 Scarcity opportunity cost and marginal analysis Felix is t

6. Scarcity, opportunity cost, and marginal analysis Felix is training Consider the following sentence: In order to swim for an hour, Felix must take time away from work where he earns $11 per hour. This is in a for a triathlon, a timed race that combines swimming, biking, and running entrance fee for the pool. Which basic principle of individual choice do these statements best illustrate? O People usually exploit opportunities to make themselves better off. O The cost of something is what you give up to get it O Markets are usually a good way to organize economic activity O Trade can make everyone better off

Solution

Second option is correct

It relates to the concept of opportunity cost which is the cost of the alternative not selected over the selected one. Hence, the actual cost that is borne is composed of an explicit payment made as well as the implict cost of the lost opportunity, here in case of a lost earnings where the person could have earned $11 for that one hour. THE COST OF SOMETHING IS WHAT YOU GIVE UP TO GET IT.