Chloe has decided to reduce the number of products that she makes and sells in her handmade home goods online shop. She will now dedicate all of her time, energy, and money to creating the best original art and hand-embroidered towels possible. In an effort to achieve more success and sales with these specific items, Chloe will have to give up selling the other products that her shop used to feature. What concept does this scenario BEST illustrate?

Question

(1 point)
Responses

Scarce resources
Scarce resources

Absolute advantage
Absolute advantage

Equilibrium price
Equilibrium price

Opportunity costs

Answer 1

The scenario BEST illustrates Opportunity costs.

Chloe is choosing to focus on creating original art and hand-embroidered towels, which means she is giving up the opportunity to sell her other products. Opportunity cost refers to the value of the next best alternative that is forgone when making a decision. In this case, her decision to concentrate on specific products comes with the cost of not selling her previous range of products.