Question

Due to limits on our time, money, and effort, we are best off when we allocate those things: with the objective of maximizing profit. by constantly assessing the opportunity costs of our choices. according to what society as a whole would want. previousnext

Answer 1

Due to resource constraints, we're best off by allocating our abilities, time, and money "by constantly assessing the opportunity costs of our choices". Every choice we make and into which we invest resources means that we are forgoing the opportunity to invest those resources elsewhere. This idea of opportunity cost is a basic tenet of economic theory. As such, we should evaluate each choice we make based on the context of the other, comparable choices we could make instead. Note that we should not always seek to maximize profit - there are other, non profit-related factors which can come into play in the calculus of decision evaluation.