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 opportunity cost in everyday life?
In daily life, opportunity costs are
the benefits or pleasures foregone by choosing one alternative over another
. For instance, if you decide to spend money eating out for dinner in a restaurant, then you forgo the opportunity to eat a home-cooked meal.
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 an example of opportunity cost in business?
Small businesses factor in opportunity costs
when computing their operating expenses in order to provide a bid or estimate on the price of a job
. For example, a landscaping firm may be bidding on two jobs each of which will use half of its equipment during a particular period of time.
What situation is the best example of opportunity cost?
It is the important concept in economics and also the relationship which is between choice and scarcity. A good example of opportunity cost is
you can spend money and time on other things but you can not spend time reading books or the money in doing something which can help
.
What is opportunity cost and 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 opportunity cost easy definition?
How is opportunity cost defined in everyday life? “
Opportunity cost is the value of the next-best alternative when a decision is made; it's what is given up
,” explains Andrea Caceres-Santamaria, senior economic education specialist at the St. Louis Fed, in a recent Page One Economics: Money and Missed Opportunities.
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 are three types of opportunity cost?
Three phrases in the definition of opportunity cost
warrant further discussion–alternative foregone, highest valued, and pursuit of an activity
.
What is your opportunity cost in life and why?
In economics, opportunity cost is
the cost of not choosing the next best alternative for your money, time, or some other resource
. … Life requires of you to make choices among mutually exclusive alternatives. Every time you select something, you forfeit other alternatives and the concomitant benefits.
What is opportunity cost in decision making?
Put simply, opportunity cost is
what a business owner misses out on when selecting one option over another
. It's a way to quantify the benefits and risks of each option, leading to more profitable decision-making overall.
What is opportunity cost equation?
The Formula for Opportunity Cost is:
Opportunity Cost = Total Revenue – Economic Profit
.
Opportunity Cost = What One Sacrifice / What One Gain
.
What is the opportunity cost of a particular product?
Opportunity cost is
the profit lost when one alternative is selected over another
. The concept is useful simply as a reminder to examine all reasonable alternatives before making a decision. For example, you have $1,000,000 and choose to invest it in a product line that will generate a return of 5%.
What is a real life example of scarcity?
A wildfire temporarily causes pollution in a city, leading to a scarcity of clean air.
Coal is used to create energy
; the limited amount of this resource that can be mined is an example of scarcity. A day has an absolute scarcity of time, as you cannot add more than 24 hours to its supply.
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.
What is the opportunity cost of taking an exam?
What is the opportunity cost of taking an exam?
the highest valued alternative that someone gave up to prepare for and attend the exam
.
