Trade-off lies at the heart of economics; a social science that studies the choices of individual and group in coordinating their wants and needs given the scarce resources. When choice is made to accept having less of one thing in order to get more of something else, the result is called trade-off. A trade-off entails that one thing has to be discarded to obtain more of another.
Trade-off creates opportunity cost, the thing that is not chosen whenever a trade-off is made. Opportunity cost is inclined by the benefits that could have been obtained by choosing the best alternative opportunity.
A market economy has always been confronted with three fundamental and interdependent coordination problems: what, how, and for whom the goods/services are produced. The market works to address these problems through spontaneous coordination of people, activities, and business as an elaborate mechanism.
Nevertheless, market mechanism – with its invisible hand – does not always work perfectly to create an efficiently ordered, stable, and fair market. Instead, the imperfect market mechanism could lead to inefficiency, instability and inequality.
Accordingly, the government – with its visible hand – is required to enhance efficiency, stability, and equality. In this regard, the government is expected to correct market failures: pursue economic growth, price stabilization, full employment; and redistribute the income.