Which definition best describes opportunity cost?
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.
Which best describes an opportunity cost quizlet?
What is opportunity cost? The most desirable alternative given up as a result of a decision. Give an example of a business trade-off. An example would be an increase use of technology or an increase use of labor.
How would you describe opportunity cost?
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 another name of opportunity cost in economics?
The alternative name of opportunity cost is Economic cost.
Is opportunity cost always positive?
Definition of opportunity cost Opportunity cost represents the cost of a foregone alternative. Opportunity cost can be positive or negative. When it’s negative, you’re potentially losing more than you’re gaining. When it’s positive, you’re foregoing a negative return for a positive return, so it’s a profitable move.
What are the applications of opportunity cost?
Opportunity cost is an important economic concept that finds application in a wide range of business decisions. Opportunity costs are often overlooked in decision making. For example, to define the costs of a college education, a student would probably include such costs as tuition, housing, and books.
What is the opportunity cost of producing?
The opportunity cost of moving from one efficient combination of production to another efficient combination of production is how much of one good is given up in order to get more of the other good.
What is the difference between opportunity cost and money cost?
Opportunity cost represents the quantum of profit that is let go, when an entity chooses one resource utilization alternative over another. Money costs are the actual cash (or credit) costs that an entity incurs during its business operations.
How does opportunity cost influence decision making?
In business, opportunity costs play a major role in decision-making. If you decide to purchase a new piece of equipment, your opportunity cost is the money spent elsewhere. Companies must take both explicit and implicit costs into account when making rational business decisions.
How does trade increase the value of goods?
By channeling goods and resources to those who value them most, trade creates value and increases the wealth created by a society’s resources. Transactions Costs: The time, effort, and other resources needed to search out and complete an exchange.
Who has a comparative advantage in producing toy trains why text to speech?
c. Sarah has a comparative advantage in producing trains because her opportunity cost for producing trains is lower than Joe’s. 5.
In which situation does one country have a comparative advantage over another country?
In economic terms, a country has a comparative advantage when it can produce at a lower opportunity cost than that of trade partners. While a country cannot have a comparative advantage in all goods and services, it can have an absolute advantage in producing all goods.