Question: Which Would Be An Example Of An Opportunity Cost?

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 are the benefits of opportunity cost?

A main benefit of opportunity costs is that it causes you to consider the reality that when selecting among options, you give up something in the option not selected.

What is opportunity cost simple 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.

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 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.

Why is opportunity cost important in 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.

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.

What is opportunity cost and how does it affect decision making?

Every time you make a choice, you’re weighing the opportunity cost of that action. Opportunity costs extend beyond just the monetary costs of a decision, but it includes all real costs of making one choice over another, including the loss of time, energy and a derived pleasure/utility.

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 also known as?

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. … It incorporates all associated costs of a decision, both explicit and implicit.