Trade-off
Definition
A trade-off is the sacrifice made when choosing one option over another. It involves giving up something in order to gain something else.
Analogy
Think about deciding between studying for an extra hour or going out with friends. If you choose to study, you're making a trade-off by sacrificing social time for better grades.
Related terms
Marginal analysis: Examining the additional benefits versus the additional costs when making decisions.
Efficiency: Achieving maximum output from available resources.
Comparative advantage: The ability to produce a good or service at a lower opportunity cost than others.
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