Opportunity cost is
the forgone benefit that would have been derived by an option not chosen
. To properly evaluate opportunity costs, the costs and benefits of every option available must be considered and weighed against the others.
What is opportunity cost * your answer?
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 easy definition?
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 best definition of the term opportunity cost apex?
opportunity cost.
The benefits of the best alternative option that are given up by a particular decision
.
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 and why is it 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 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 in decision making?
Since consumers' resources such as time, attention, and money are limited, they must choose how to best allocate them by making tradeoffs. The concept of trade-offs due to scarcity is formalized by the concept of opportunity cost. The opportunity cost of a choice is
the value of the best alternative forgone
.
What is the difference between an economic cost and an opportunity cost?
Economic costs include
accounting
costs, but they also include opportunity costs. Opportunity costs are the benefits you could have received if you had chosen one course of action, but that you didn't because you went with another option.
What is opportunity cost explain with example?
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%.
Which scenario is the best example of an opportunity cost?
The correct answer is a.
A computer company produces fewer laptops to meet tablet demand
. Opportunity cost defines the benefit obtained by having a commodity after forgoing some other commodity. In the problem statement, the computer company incurs an opportunity cost of laptops for tablets.
What is a synonym for opportunity cost?
opportunity costnoun. Synonyms:
economic cost
.
opportunity cost
noun. The cost of an opportunity forgone (and the loss of the benefits that could be received from that opportunity); the most valuable forgone alternative.
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.
How opportunity cost is applied in our daily life?
They are applicable beyond finance and accounting. 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 opportunity cost and how does it impact your life?
Opportunity costs can
impact various – and critical – aspects of your life
, including money, career, home and family, and other lifestyle elements. In general, it means having to choose one option over the other, be it money, time or lifestyle choices – and living with the consequences.
Is opportunity cost good or bad?
Benefits. Incurring opportunity
costs is not inherently bad
, as they do not detract from business decisions; instead, opportunity costs often enhance the decision-making process. Weighing opportunity costs allows the business to make the best possible decision.
