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
The concept that this scenario best illustrates is opportunity costs.
The concept that this scenario best illustrates is opportunity cost.
Opportunity cost refers to the idea of giving up one alternative in order to pursue another. In this scenario, Chloe is making a decision to focus on creating the best original art and hand-embroidered towels, which means she has to give up selling the other products that her shop used to feature. By choosing to dedicate her time, energy, and money to these specific items, Chloe is making a trade-off and forgoing the opportunity to sell other products. The opportunity cost in this scenario is the potential sales and success that could have been achieved by selling the other products.
To determine the best concept that this scenario illustrates, it is important to understand the definitions of the other options:
- Scarce resources: This concept refers to the limited availability of resources, such as time, money, and materials, and how individuals must allocate and manage these resources effectively. While Chloe's decision may involve the consideration of scarce resources, it does not directly illustrate the concept.
- Absolute advantage: This concept relates to the ability of one individual, firm, or country to produce a good or service more efficiently than others. The scenario does not provide information that directly relates to the comparison of Chloe's abilities or efficiency in producing different products.
- Equilibrium price: This concept refers to the point at which the quantity demanded by buyers is equal to the quantity supplied by sellers, resulting in a stable market price. The scenario does not provide information about the market demand or supply dynamics, so it does not illustrate the concept of equilibrium price.
In conclusion, the concept that this scenario best illustrates is opportunity cost, as Chloe is giving up the opportunity to sell other products by focusing exclusively on creating original art and hand-embroidered towels.