What Is An Opportunity Cost And How Does The Idea Relate To The Definition Of Economics?

WEEK 1 Discussion questions and AnswersWhat is an opportunity cost and how does the idea relate to the definition of economics? What are the differences between macroeconomics and microeconomics? What are unemployment and inflation and how do these concepts relate to economic growth?Opportunity cost is the value, as opposed to a benefit, of choosing a preferred alternative while making a decision (Marwara & Hurtwitz, 2017). Business provides a party with many choices where only one choice is required. In this sense, one party loses the benefits of one or many other alternatives in favor of enjoying the benefits offered by the chosen alternative. Opportunity cost related to economics by linking some basic aspects of economics such as scarcity and choice. Microeconomics studies are issues faced by individuals and companies while macroeconomics studies issues faced by the entire economy such as unemployment rates. Unemployment stands for a situation whereby a person actively searches for an employment and not finding it (Farmer, 1999). When people are unemployed, their spending power is limited, which slows the economy rate because the economy loses valuable consumers. On the other hand, inflation refers to increasing price of goods and services with time.