1. Time: Choosing to use your time to study instead of hanging out with friends 2. Money: Choosing to use your money to go to a movie instead of going to an amusement park 3. Efficiency vs. equality: When a government chooses to redistribute income from the wealthy to the poor, it reduces the reward for working hard
Work Step by Step
In general, people have limited amounts of resources (that is, we don't have unlimited amounts of money, time, etc.). We must distribute these limited resources in a way that makes us best off. In distributing these resources, we face a trade-off (in that we benefit by choosing to allocate towards using one resource and lose by having to give up the other resources).