Trade off
Definition. A trade off is a situation in which having more of one thing requires giving up some of another, because resources used for one purpose cannot at the same time be used for another. It arises directly from scarcity and is closely linked to the idea of opportunity cost.
Choosing along a production possibility curve illustrates a trade off, since producing more of one good means producing less of the other. Policymakers also face trade offs, such as between equity and efficiency.
This term belongs to Opportunity Cost in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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