Why an increase in spending on police and armed forces may result in an opportunity cost?

Answer 1

Opportunity cost is defined as what you have to give up to get something. Specifically, the opportunity cost of doing something is the value of best alternative. For example, if Bob decides to watch TV instead of studying for a big science test he has in school the next day, the opportunity cost is that study time. All decisions carry an opportunity cost even in cases such as defense or public safety spending because there is always an alternate choice. For example, a city could choose to hire 50 new police officers or, with the same money, they could choose to hire 50 new teachers or build a new park or do any of a large number of things. In particular, if there is a greater need for something else, such as new teachers, then the opportunity cost of increasing police spending will be greater than any benefit from the spending. In that case, police spending would be a poor economic decision because there is another place to spend the money that will create more good for the city as a whole.