Is Opportunity Cost Equal To Monetary? - Fixanswer

Opportunity cost is the benefit you forego in choosing one course of action over another. You can determine the opportunity cost of choosing one investment option over another by using the following formula:

Opportunity Cost = Return on Most Profitable Investment Choice – Return on Investment Chosen to Pursue

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Is opportunity cost included in cash flow?

While not specifically included in the definition of a relevant cash flow (as noted above)

opportunity costs are also relevant cash flows

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Is monetary cost equal to opportunity cost?

Producing goods and services requires actual expenditures. … These are examples of monetary costs, or the actual expenditures involved in production. Opportunity costs refer to whatever must be forgone to obtain an item or produce a good.

What is opportunity cost give example?

The opportunity cost is

time spent studying and that money to spend on something else

. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment). A commuter takes the train to work instead of driving.

What is an example of opportunity cost in your life?

A player attends baseball training to be a better player instead of taking a vacation

. The opportunity cost was the vacation. Jill decides to take the bus to work instead of driving. It takes her 60 minutes to get there on the bus and driving would have been 40, so her opportunity cost is 20 minutes.

What is opportunity cost explain with example?

When economists refer to the “opportunity cost” of a resource, they

mean the value of the next-highest-valued alternative use of that resource

. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can't spend the money on something else.

What is the non-monetary example of opportunity cost?

Job A's overtime is a monetary (reduced pay per hour worked) and opportunity cost, because you could be socializing during those overtime hours.

Job A's longer commute

is a non-monetary and opportunity cost, because you will need to wake up earlier.

What is opportunity cost concept?

What Is Opportunity Cost? Opportunity costs

represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another

. … Understanding the potential missed opportunities foregone by choosing one investment over another allows for better decision-making.

What are the types of opportunity cost?

Explicit Cost: This is an opportunity cost that involves a money payment and usually a market transaction. …
Implicit Cost: This is an opportunity cost that DOES NOT involve a money payment or market transaction.

Why is opportunity cost important?

The concept of Opportunity Cost

helps us to choose the best possible option among all the available options

. It helps us to use every possible resource tactfully, efficiently and hence, maximize economic profits.

What is opportunity cost in time value of money?

This is the time value of money. The opportunity cost of money is

the difference between the value of one option that is given up for another option

. Let's take an example. You have invested Rs 1 lakh in the stock market with the hope that you would be able to get at least 10% return on your investment.

Is your passport expense a sunk cost or opportunity cost?

A. $101 you spent on a

passport is an opportunity cost

because you cannot get your money back. B. $101 you spent on a passport is a sunk cost because you cannot get your money back.

How does scarcity affect opportunity cost?

This concept of scarcity leads to the idea of opportunity cost. The opportunity cost of an action is

what you must give up when you make that choice

. … Opportunity cost is a direct implication of scarcity. People have to choose between different alternatives when deciding how to spend their money and their time.