What Are The Three Examples Of Opportunity Cost?

What is your opportunity cost of taking this course?

Your opportunity cost of taking this course is: …

the cost of the activity you would have chosen if you had not taken the course..

What is opportunity cost explain with numerical example?

Opportunity cost is the next best alternative foregone in choosing the best one. Suppose an economy produces only two goods X and Y. … if the economy decides to produce 2X, it has to cut down production of Y by 2 units because resources are limited. in this case opportunity cost of producing one more unit of X is 2Y.

Is opportunity cost included in cash flow?

While not specifically included in the definition of a relevant cash flow (as noted above) opportunity costs are also relevant cash flows.

What is the opportunity cost of a particular product?

— In the words of Left witch, “Opportunity cost of a particular product is the value of the foregone alternative products that resources used in its production, could have produced.” Opportunity cost is not what you choose when you make a choice —it is what you did not choose in making a choice.

How does opportunity cost affect your life?

Opportunity costs apply to many aspects of life decisions. Often, money becomes the root cause of decision-making. If you decide to spend money on a vacation and you delay your home’s remodel, then your opportunity cost is the benefit living in a renovated home.

Which is an example of opportunity cost 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.

What is opportunity cost easy definition?

Opportunity cost is an economics term that refers to the value of what you have to give up in order to choose something else. In a nutshell, it’s a value of the road not taken.

How do you use opportunity cost in a sentence?

Opportunity cost in a Sentence 🔉My mother explained she could not buy two snacks and that popcorn would be our opportunity cost if we chose to get candy. … Samantha looks at the money should would save living in a cheaper place as the opportunity cost of owning a nice home.More items…

What is another name for opportunity cost in economics?

In microeconomic theory, ‘opportunity cost’, or ‘alternative cost’, is the loss of potential gain from other alternatives when one particular alternative is chosen over the others.

What is meant by opportunity cost quizlet?

Explain the concept of opportunity cost. Opportunity Cost is when in making a decision the value of the best alternative is lost. e.g. choosing electricity over gas, the opportunity cost is what you’ve lost from not picking gas. Firms take decision about what economic activity they want to be involved in.

How do you explain opportunity cost to a child?

Opportunity cost is the value of the next best thing you give up whenever you make a decision. It is “the loss of potential gain from other alternatives when one alternative is chosen”.

What are the examples of opportunity cost?

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 costs in economics?

What Is Opportunity Cost? Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. The idea of opportunity costs is a major concept in economics. … Bottlenecks, for instance, are often a result of opportunity costs.

What is importance of opportunity cost?

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.

Which situation best describes an opportunity cost?

Explanation: Opportunity cost is the cost of the forgone alternative when a choice is made. In this case, the store made a choice between buying a ship of computers, or buying new phones. It cannot do both because the firm has limited resources.

What is the opportunity cost of an investment quizlet?

For a safe capital investment, the opportunity cost is the interest rate on safe debt securities, such as high-grade corporate bonds. For riskier capital investments, the opportunity cost is the expected rate of return on risky securities—investments in the stock market, for example.

What is opportunity cost and 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 is the difference between opportunity cost and money cost?

(a)Opportunity cost is the alternative forgone. The opportunity cost of a product is the alternative which must be given up in order to produce that product. … Money cost, on the other hand, refers to the total amount of money that is spent in order to acquire a set of goods and services.

What has the largest impact on opportunity cost?

Explanation: Limited resources means there is less resources available to the consumers. Scarce resources causes firms to make a choice resulting in opportunity cost. If the consumers money and attention is limited then they must make trade offs.