A tradeoff is
A) represented by a point outside a PPF.
B) a constraint that requires giving up one thing to get another.
C) a transaction at a price either above or below the equilibrium price.
D) represented by a point inside a PPF.

Question

Quizplus · Accepted Answer

A tradeoff refers to the decision to give up one alternative in order to gain another alternative. Therefore, a tradeoff implies a trade-off between two alternatives, and one alternative must be given up in order to gain the other alternative. This is a common occurrence in economics, where individuals and businesses must make decisions about how to allocate scarce resources among competing uses. For example, a business might have to decide between investing in new equipment or hiring additional workers. In this case, the business will have to weigh the benefits and costs of each alternative and make a tradeoff.

A Tradeoff Is