The correct choice is (b) Opportunity cost. Selecting one option requires giving up the benefit of the other alternative, which precisely defines opportunity cost when managing limited financial resources against competing desires.
A student has ₹100 and must choose between buying a notebook or saving the money for buying a tennis racket later. Which economic concept best explains this situation? (a) Demand (b) Opportunity cost (c) Production (d) Inflation
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The correct option is (b) Opportunity cost. The student has a limited sum of ₹100 and faces mutually exclusive choices. Choosing to purchase the notebook immediately means sacrificing the future acquisition of the tennis racket or vice versa. In economics, the value of the next best alternative that is forgone when making a decision represents the opportunity cost.
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