Trade-offs

Definition

Trade-offs refer to the choices individuals, businesses, and governments make when they give up one thing in order to gain another. It involves sacrificing one option for another due to limited resources.

Related terms

Opportunity Cost: The opportunity cost is the value of the next best alternative that is forgone when making a choice.

Scarcity: Scarcity refers to the limited availability of resources compared to unlimited wants and needs.

Production Possibilities Curve (PPC): The PPC shows all possible combinations of goods and services that can be produced given available resources and technology.