What is the opportunity cost of an item?
The idea behind opportunity cost is that the cost of one item is the lost opportunity to do or consume something else; in short, opportunity cost is the value of the next best alternative.
What is opportunity cost of an item quizlet?
Terms in this set (36) A key concept in economics is that of “opportunity cost.” What does this term mean? What is an example of the opportunity cost of some decision you have made? The Opportunity Cost of the chosen item or activity is the value of the best alternative that is forgone.
What is an opportunity cost example?
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.
How do you find the opportunity cost of something?
The formula for calculating an opportunity cost is simply the difference between the expected returns of each option. Say that you have option A—to invest in the stock market, hoping to generate capital gain returns.
What is opportunity cost and how should this factor into the choices we make quizlet?
Opportunity Cost. The value of the best alternative passed up for the chosen item or activity.
What is opportunity cost and how should this factor into the choices we make?
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.
What is an example of opportunity cost in business?
Opportunity cost, on the other hand, refers to money that could be earned (or lost) by choosing a certain option. For example, you purchased $1,000 in new equipment to manufacture backpacks, your number one product. That is a sunk cost.
Which of the following is the best example of opportunity cost?
For example, choosing public transportation to travel to a particular destination by foregoing the option of traveling in one’s own car is a good example of opportunity cost, because you end up saving money which needs to be spent on fuel.
What is an opportunity cost in business?
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 examples quizlet?
The cost of making a choice is that the next best alternative is forgone. This is know as opportunity cost. For example if a Government decides to make the choice of devoting more resources to the NHS then the opportunity cost is devoting those resources into the education system.
Which answer best defines opportunity cost?
Opportunity cost is defined as the value of the next best alternative. In this case your next best alternative is to get a five-dollar dinner at Burger Joint.
Which of the best describes an opportunity cost economics?
An opportunity cost arises when a person has more than one option to choose. If the person chooses an alternative from the available choices, the opportunity cost is the benefit that might have been earned from the second-best alternative.
What are the types of opportunity cost?
The two types of opportunity costs are explicit opportunity cost and implicit opportunity cost. Explicit opportunity cost has a direct monetary value.
What are some examples of opportunities?
Opportunities refer to favorable external factors that could give an organization a competitive advantage. For example, if a country cuts tariffs, a car manufacturer can export its cars into a new market, increasing sales and market share.
What is opportunity cost in cost accounting?
Home » Accounting Dictionary » What is an Opportunity Cost? Definition: An opportunity cost is the economic concept of potential benefits that a company gives up by taking an alternative action. In other words, this is the potential benefit you could have received if you had taken action A instead of action B.