A trade-off is a situational decision that involves diminishing or losing one quality, quantity, or property of a set or design in return for gains in other aspects. In other words, it is a balancing of factors that are not all attainable at the same time. Trade-offs are often used to describe situations in everyday life, such as choosing between investing in stocks, which are risky but carry great potential return, versus bonds, which are generally safer but with lower potential returns.
In economics, a trade-off is expressed in terms of the opportunity cost of a particular choice, which is the loss of the most preferred alternative given up. Trade-offs arise when activities are incompatible, meaning that more of one thing necessitates less of another. For example, an airline can choose to serve meals, adding cost and slowing turnaround time at the gate, or it can choose not to, but it cannot do both without bearing major inefficiencies.
Trade-offs are also important in decision-making. When making a decision, it is not always enough to consider what we stand to gain from going for option B over option A. We also need to take into account what we stand to lose. Tradeoffs imply that to get really great at a few things, we have to accept being mediocre at a lot more.
