Question

Does opportunity cost change over time?

Answer 1

Opportunity cost of a good is the next best alternative good that has been sacrificed in its favor.

Explanation:

The next best alternative good changes with time. Naturally opportunity cost also will change.

Suppose a farmer cultivates Wheat. Land is put to wheat cultivation. He gets maximum revenue from wheat. So he undertakes. The next best best use for his land is paddy. It gives the next best revenue. Since its revenue is less than wheat, he prefers wheat. Here the opportunity cost of wheat is paddy.

As days passed, if sugar cane cultivation can give him more revenue than paddy but less than wheat. Now the opportunity cost of wheat is sugar cane.