Question

1. Explain the terms Trade-Offs and Opportunity Costs. How can you apply them to your decision to attend college?
2. A mixed economic system incorporates aspects of both centralized command and control and a decentralized pricing mechanism. Does the United States have a mixed economic system? Explain your answer.
3. Explain the terms productive and allocative efficiency. Provide an example of each.

Answer 1

Opportunity cost is basically the cost of shipping out on the next best choice. In other words, opportunity cost represents the advantage one could get by taking a different decision.

Trade-off is know as an opportunity cost, which is mostly preferred and one of the best alternative. Trade-off involves a sacrifice that should be made in order to get certain product or any experience.

Example : a person who wants to give up on buying something because he wants to buy something else

We all know attending college isn’t cheap.One has to spend money in travelling everyday to college one should pay annual fees, tuition, books, room and board, food, clothing, transportation and any number of other things associated with attending college. We spend so much money on this thinking that one day it will pay us off but it never does so instead of this we could start up a small business where we can earn huge profit.
Here the opportunity cost is the money you spend on attending college and the money u could have spent in setting up a small business which could give u profit in no time

The United States is know to have mix economy. It is known as 'mixed economy' because both privately owned business and government owned business plays a crucial role. The US economy historic focuses on debates related to roles of public and private sector.

When both government based company and private based company produces goods then the competition between them increases which gives rise to new technologies and also the goods becomes cheaper and they can export it.

Productive efficiency deals with producing goods in the best way, that is producing goods at cheaper rate.

Allocative efficiency deals with distribution of Goods and services best possible way.

For example consider an economy that is productively efficient in producing large number of shoes but imagine if all its customers were left footed and they do not have thier right foot it will allocative inefficient because nobody will be benefited even if it's shoes are sold at cheaper rate