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The scenario illustrates the concept of opportunity cost where Miguel chooses to save for a car over traveling with friends, showcasing the value of the next best alternative in decision-making.
Opportunity cost is the concept demonstrated in the scenario where Miguel decides to save for a car instead of traveling with friends. By choosing the car, he gives up the opportunity to travel, which represents the value of the next best alternative. Economists often use the idea of opportunity cost to analyze decision-making and trade-offs.
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