What is Opportunity Cost? definition, example PPC curve

What is Opportunity Cost? definition, example PPC curve

Opportunity cost is a very important concept in economics and UPSC. Let me explain it in the easiest way using a simple definition , example , and Production Possibility Curve (PPC) . 🔍 What is Opportunity Cost? Opportunity Cost = The cost of the next best alternative that you give up when you make a choice. 🎯 Easy Example: Imagine: You have ₹100 and two choices: 🍔 Buy 2 burgers (₹50 each) 📚 Buy 1 book (₹100) If you choose the book , you give up the chance to eat 2 burgers . 👉 Opportunity cost = 2 burgers If you choose the burgers , you give up the chance to buy the book . 👉 Opportunity cost = 1 book 📈 Understanding with a Curve – Production Possibility Curve (PPC) PPC shows different combinations of two goods that an economy can produce with limited resources . Let’s say: An economy produces only two things: Guns and Butter Combination Guns Butter A 0 10 B 1 9 C 2 7 D 3 4 E 4 0 Each time you produce more guns , you produce less butter . 👉 The butter you give up is the opportunity cost of producing more guns . 📊 Curv…