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?
(1 point)
Responses
Scarce resources
Scarce resources
Absolute advantage
Absolute advantage
Equilibrium price
Equilibrium price
Opportunity costs
Opportunity costs
ARE YOU SURE
Yes, I am sure that the scenario described best illustrates the concept of opportunity costs. Opportunity costs refer to the value of the next best alternative that is forgone when making a decision. In this scenario, Chloe is giving up the opportunity to sell other products in order to focus on creating and selling original art and hand-embroidered towels. By choosing to specialize in these specific items, Chloe is acknowledging that she has limited time, energy, and money and is making a trade-off by dedicating them to these particular products, thereby forgoing the opportunity to sell other items.
The concept that this scenario best illustrates is opportunity costs.
The concept that this scenario best illustrates is opportunity costs.
Opportunity costs refer to the potential benefits or profits that are forgone or sacrificed when one choice is made over another. In this scenario, Chloe has made the decision to focus solely on creating the best original art and hand-embroidered towels, which means she will have to give up selling the other products her shop used to feature. By choosing to dedicate her time, energy, and money to these specific items, Chloe is sacrificing the potential benefits and sales that could have come from selling the other products.
To understand this concept in more detail, opportunity costs can be calculated by comparing the benefits and costs of different options. In this case, Chloe needs to weigh the potential benefits and profits she could achieve by selling the other products against the success and sales she hopes to achieve by focusing on original art and hand-embroidered towels. By making this decision, Chloe is acknowledging the opportunity costs involved - the benefits or profits she gives up by choosing one option over another.
So, the concept that best fits this scenario is opportunity costs.