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 definition?
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 is opportunity cost and give any 3 examples?
Examples of Opportunity Cost.
Someone gives up going to see a movie to study for a test in order to get a good grade
. The opportunity cost is the cost of the movie and the enjoyment of seeing it. … The opportunity cost of taking a vacation instead of spending the money on a new car is not getting a new car.
What is opportunity cost simple words?
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 opportunity cost explain with example class 12?
Opportunity Costs are the benefits that an individual, investor or business forego (miss out) , when they choose one alternative over another.
Opportunity Cost is the next best alternative
, which is foregone, when a particular alternative is chosen. Some Examples on Opportunity Cost.
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 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
.
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.
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.
Which 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 diagram?
Definition of Opportunity Cost in Economics. … The opportunity costs of a product are only
the best alternative forgone
and not any other alternative. These costs are viewed as the next-best alternative goods that we can produce with the same value of factors which are more or less the same.
Is opportunity cost a real cost?
Opportunity Cost Definition
Opportunity cost is the value of what you lose when you choose from two or more alternatives. … “
The real cost of any purchase isn't the actual dollar cost
. Rather, it's the opportunity cost—the value of the investment you didn't make, because you used your funds to buy something else.”
What is the formula for opportunity cost?
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
.
What is opportunity cost in project management?
Opportunity Cost is a concept in economics which quantifies the impact of selecting one option instead of another ‘next best' alternative. In Project Management it is
applied to quantify the missed opportunity when deciding to use a resource
(e.g. investment dollars) for one purpose versus another.
What is opportunity cost BYJU's?
Opportunity cost is a concept in Economics that is defined as those
values or benefits
that are lost by a business, business owners or organisations when they choose one option or an alternative option over another option, in the course of making business decisions.
What is sunk cost with example?
A sunk cost refers to
a cost that has already occurred and has no potential for recovery in the future
. For example, your rent, marketing campaign expenses or money spent on new equipment can be considered sunk costs. A sunk cost can also be referred to as a past cost.
