According to the question, in many cases, it is reasonable to refer to the opportunity cost as the relative price.
A relative price refers to the price of a commodity in terms of another. This implies the ratio of prices of two commodities. Commodity in this case is goods and services.
Further Explanation
Also opportunity cost can be expressed in relative price. In most cases, the relative price gives individual better insight into the real cost of a commodity than the monetary price.
Opportunity cost is the forgoing of a particular commodity at the expense of other wants or the price paid to acquire a commodity at the expense of another. It is also known as the forgone alternative, alternative forgone or real cost.
Opportunity cost is also described as the benefit that business or individual lost when choosing alternative to another. Business owners can use opportunity cost to arrive at certain decision that would be of benefit to their company, especially when they are faced with multiple options.
A farmer has 300 dollar and he has to buy a tuber of yam and a piece of land which sells for 250 and 400 respectively. If he decides to buy a tuber of yam at the expense of the land, it means the land is the alternative forgone.
KEYWORDS:
- opportunity cost
- relative price
- commodity
- prices
- expense
