Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A): The concept of opportunity cost applies to an individual as well as to a society.
Reason (R): Opportunity cost is the money spent on buying one more unit of a good.
In the light of the above statements, choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) is true but (R) is false.
Assertion (A): The concept of opportunity cost applies to an individual as well as to a society. — True. A family giving up some luxuries for more education bears an opportunity cost. So does a country that gives up cotton for more corn.
Reason (R): Opportunity cost is the money spent on buying one more unit of a good. — False. Opportunity cost is the other good that has to be forgone to have a little more of one good. It is what is given up, not the money paid.
NCERT (2026-27): “Production Possibility Frontier … If more of the scarce resources are used in the production of corn, less resources are available for the production of cotton and vice versa. Therefore, if we want to have more of one of the goods, we will have less of the other good. Thus, there is always a cost of having a little more of one good in terms of the amount of the other good that has to be forgone. This is known as the opportunity cost of an additional unit of the goods.” “Note that the concept of opportunity cost is applicable to the individual as well as the society. The concept is very important and is widely used in economics. Because of its importance in economics, sometimes, opportunity cost is also called the economic cost.” |