The alternative name of opportunity cost is Economic cost .
What is meant by term opportunity cost?
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.
What is the other name for opportunity cost?
The alternative name of opportunity cost is Economic cost .
What is the other name of economic cost?
opportunity cost
The net value or utility of the most desirable alternative to a projected course of action.
Are choice and opportunity cost synonymous?
Assuming the best choice is made, it is the “cost” incurred by not enjoying the benefit that would be had by taking the second best choice available. ... Opportunity cost is a key concept in economics, and has been described as expressing “the basic relationship between scarcity and choice “.
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 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.
What is the best definition of opportunity cost?
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. ... Opportunity cost does not necessarily involve money. It can also refer to alternative uses of time.
What is the importance of opportunity cost?
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 formula?
The Formula for Opportunity Cost is: Opportunity Cost = Total Revenue – Economic Profit . Opportunity Cost = What One Sacrifice / What One Gain .
What are the examples of economic cost?
Economic cost includes opportunity cost when analyzing economic decisions. An example of economic cost would be the cost of attending college . The accounting cost includes all charges such as tuition, books, food, housing, and other expenditures.
What is cost in economics and its types?
Cost is the sacrifice made that is usually measured by the resources given up to achieve a particular purpose . It is a sacrifice made in order to obtain some goods or services. Costs are not always expenses. Some costs are assets, others are expenses. Expenses are expired (used up) costs.
How is economic cost calculated?
How are economic costs calculated? ... the change in the cost of funds since you took out your fixed rate loan . the term remaining in the fixed rate period . the amount you're repaying .
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.
Whats the opposite of opportunity cost?
Simply stated, an opportunity cost is the cost of a missed opportunity . It is the opposite of the benefit that would have been gained had an action, not taken, been taken—the missed opportunity. This is a concept used in economics.
What is an example of the law of increasing opportunity cost?
Increasing opportunity cost means losing out on something else at an ever-growing rate . ... For example, if your company spent $20,000 on vehicles, then the monetary cost was $20,000. However, an opportunity cost came with that purchase.
