The Opportunity Cost of a Non-Alternative Input

Opportunity cost refers to the cost of an alternative choice that has to be given up in order to pursue a particular course of action. In other words, it is the cost of the next best alternative that is foregone. However, when an input has no alternative use, its opportunity cost is zero.

Central Problems of an Economy

The central problems of an economy refer to the questions of what to produce, how to produce, and for whom to produce. These problems arise due to the scarcity of resources relative to unlimited wants and needs. Therefore, it becomes important to allocate resources efficiently to maximize satisfaction and minimize waste.

Opportunity Cost in Resource Allocation

Opportunity cost plays a crucial role in resource allocation decisions. In an economy where resources are limited, every decision involving resource allocation has an opportunity cost. For instance, if a country decides to allocate more resources towards producing cars, the opportunity cost would be the production of other goods and services such as healthcare, education, and housing.

However, if an input has no alternative use, its opportunity cost is zero. This is because there is no alternative option that could have been pursued using the same input. Therefore, the decision to allocate such an input towards a particular use does not involve any opportunity cost.

Conclusion

In conclusion, the opportunity cost of an input which has no alternative use is zero. This means that the decision to allocate such an input towards a particular use does not involve any opportunity cost. However, in an economy where resources are limited, every decision involving resource allocation has an opportunity cost. Therefore, it becomes important to allocate resources efficiently to maximize satisfaction and minimize waste.

An input has no alternative use then the opportunity cost of that input is zero. This is because opportunity cost refers to the value of the next best alternative. As in the given case, there is no alternative available so, the OC will be zero.