What is opportunity cost select the best 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 in this scenario?
The opportunity cost in this scenario is the three lost opportunities Harry experiences by deciding to go to his parents house. The term opportunity cost refers to the loss of potential gain from other alternatives when one alternative is chosen
What is opportunity cost explain with numerical example?
Explain with the help of a numerical example. An opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. However if company’s return is only 3% when we could have made a return of 9% from FD, then our opportunity cost is (9% – 3% = 6%).
Why is opportunity cost important?
Opportunity Cost helps a manufacturer to determine whether to produce or not. He can assess the economic benefit of going for a production activity by comparing it with the option of not producing at all. He may invest the same amount of money, time, and resources in another business or Opportunity.
What is opportunity cost and its importance in decision making?
“Opportunity cost is the cost of a foregone alternative. If you chose one alternative over another, then the cost of choosing that alternative is an opportunity cost. Opportunity cost is the benefits you lose by choosing one alternative over another one.”
What is opportunity cost diagram?
Definition – Opportunity cost is the next best alternative foregone. If we spend that £20 on a textbook, the opportunity cost is the restaurant meal we cannot afford to pay. If you decide to spend two hours studying on a Friday night. The opportunity cost is that you cannot have those two hours for leisure
What is opportunity cost from project point of view?
Opportunity cost is the loss of potential future return from the second best unselected project. In other words, it is the opportunity (potential return) that will not be realized when one project is selected over another.
What is another name of opportunity cost in economics?
The alternative name of opportunity cost is Economic cost.
Why is opportunity cost increasing?
Increasing opportunity costs occurs when you produce more and more of one good and you give up more and more of another good. This occurs when resources are less adaptable when moving from the production of one good to the production of another good
How is opportunity cost related to scarcity?
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 happens when opportunity cost decreases?
Concave: Decreasing Cost (Click the [Concave] button): This is a concave production possibilities curve with decreasing opportunity cost. In this case, opportunity cost actually decreases with greater production. In this case the economy foregoes decreasing amounts of one good when producing more of the other.
How do you express 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