Trade-off
noun · Economics
Definition
A situation where gaining more of one thing means having less of another.
Explanation
Trade-offs arise from scarcity.
Example
Spending more on health means less for education if the budget is fixed.
Common confusion
A trade-off is the situation; opportunity cost is the value lost.
Related terms
- Opportunity costThe value of the next best alternative given up when a choice is made.
- ScarcityThe condition that resources are limited while wants are unlimited.
Study guides that use this term
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