(a) Distinguish briefly but clearly between opportunity cost and money cost.
Explanation
(a)Opportunity cost is the alternative forgone. The opportunity cost of a product is the alternative which must be given up in order to produce that product. It is the sacrifice made in order to enjoy something else. For example, if a student has N5 to buy either a book or a shirt. If he buys a shirt instead of a book, the opportunity cost is the book which the student has forgone in order to buy the shirt. Money cost, on the other hand, refers to the total amount of money that is spent in order to acquire a set of goods and services. This tallies with the accountant concept of cost. For example, a consumer who spent to buy a shirt has dispensed with cash. The N15 spent is the money cost.
(b) The concept of opportunity cost is relevant to the economies of West African countries. This is because the concept emphasises the basic problem of choice which is the main core of the subject matter of economics as a result of the limited available resources vis-a-vis unlimited wants. Since every economic problem involves choice and every choice involves opportunity cost, therefore, opportunity cost is relevant to the economies of West African countries. The concept involves efficient allocation of scarce resources to pressing needs of the society. It also shows that every activity involves a sacrifice whether on the side of an individual, a firm or a government. The government will decide which sector will take the lion's share of the resources of a country. It helps in government decision-making process.