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Discuss why we need to be concerned with the value of something we did not choose, as opposed to simply stating the value of the item we want to pick.
One of the key concepts in economics is opportunity cost, which simply put, is the value we place on our second choice. That is, when presented with a number of choices, describe the value of the one we pick in terms of the value we place on our next best choice. This definition may seem odd to you, given that we don’t pick our second choice. For example, if I decide to go out for pizza, that means I did not go out for a hamburger (which would have been my second choice). In business, an opportunity cost is the lost opportunity when we make a choice; managers need to ensure they are making the choice that yields the highest return in order to maximize profit.
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