THE COST OF SOMETHING IS WHAT YOU GIVE UP TO GET IT.
As people face Trade off , decision making requires Cost, Benefit analysis. It requires comparing of cost and benefits of alternative products and chosing the one which is more beneficialLy the cost of giving something.
For Example. After doing my B.COM. I had two options either to go for job or for post graduation. I chose Post Graduation over Job so I gave up cost of Job in order to get Post graduation degree.
Rational consumer used to analysis the product and its opportunity cost. So, he choose the next best alternative. the one he chose requires the cost of something that he has to give up. For instance : The cost of pizza and Burger with Coke , the opposite would be the enjoyment of delicious pizza.
This concept is important for learning behaviour of consumer. Every Producer keep this concept in mind while analysing the Market. This concept applies in day to day life.
Decisions requires comparing cost and benefits of alternative.
whether to go to college or to work?
Whether to study or tu go on a date.?
Whether to go to to class or sleep in?
This concept depends upon many other factor also.
So Economists consider it as valid cost for decision making.
As people face Trade off , decision making requires Cost, Benefit analysis. It requires comparing of cost and benefits of alternative products and chosing the one which is more beneficialLy the cost of giving something.
For Example. After doing my B.COM. I had two options either to go for job or for post graduation. I chose Post Graduation over Job so I gave up cost of Job in order to get Post graduation degree.
Rational consumer used to analysis the product and its opportunity cost. So, he choose the next best alternative. the one he chose requires the cost of something that he has to give up. For instance : The cost of pizza and Burger with Coke , the opposite would be the enjoyment of delicious pizza.
This concept is important for learning behaviour of consumer. Every Producer keep this concept in mind while analysing the Market. This concept applies in day to day life.
Decisions requires comparing cost and benefits of alternative.
whether to go to college or to work?
Whether to study or tu go on a date.?
Whether to go to to class or sleep in?
This concept depends upon many other factor also.
So Economists consider it as valid cost for decision making.
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