Opportunity cost is the highest-valued alternative foregone in order to take an economic action.
The cost of passing up the next best choice when making a decision. For example, if an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose the asset could have been used for. Opportunity cost analysis is an important part of a company's decision-making processes, but is not treated as an actual cost in any financial statement.
comparative advantage
Importance of Opportunity cost to an individual are : 1. It influences the individuals household in decision making among his numerous wants. 2. It helps the individual to know how to maximise his satisfaction from his limited resources through drawing scale of preference. Importance of Opportunity Cost to Firms 1. It helps a firm to decide to use labour intensive instead of capital intensive method to achieve the highest output. Importance of Opportunity Cost to Government: 1. It enables the government to maximize the welfare of its citizen by choosing the right projects it should spend its scarce resources on.
The cost of passing up the next best choice when making a decision. For example, if an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose the asset could have been used for. Opportunity cost analysis is an important part of a company's decision-making processes, but is not treated as an actual cost in any financial statement.
This question does not have a simple answer, since the idea has been around for a long time in various forms. Adam Smith wrote about how people have to work to produce things, and so production used to make one thing (in his example, beaver skins) can't be used to make another (deer). David Ricardo, Karl Marx, and Leon Walras further developed the theory of value. The "Austrian Marginalists," such as Karl Menger, Eugen Böhm-Bawerk, and Fredrick Wieser figured out that it was the marginal not the average benefits and costs that determined price, not the average benefits and costs.Frank Knight and Alfred Marshall worked on how supply and demand interact with opportunity costs, but never developed the full modern version of opportunity costs. It was not until Mises, Robbins and Hayek came along that a full modern subjectivist concept of opportunity cost was developed, but they certainly did not figure it out on their own.My reference is mostly James Buchanan's "Cost and Choice," which provides an excellent history of opportunity costs. A full version is available here: http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=1068&Itemid=27Sorry for not giving you a shorter answer. If you need it for a quiz or something, I would say put Fredrick Wieser, who coined the term.
Opportunity Cost can vary depending on what you are giving up exactly.
Every time a choice is made, opportunity costs are assumed.
The law of increasing opportunity costs states that the more of a product that is produced the greater is its opportunity cost.
the increased opportunity costs in tourism
The opportunity costs and the benefits.
The relationship between trade offs and opportunity costs is that they both have to do with economics. A person has to make a choice that would have to sacrifice.
because opportunity itself is scarce too
The relationship between trade offs and opportunity costs is that they both have to do with economics. A person has to make a choice that would have to sacrifice.
The opportunity cost is defined as alternative cost - costs measured in output of products and services forgone.It can't be defined as variable cost. In the simple formula p = 2q + 100, we can say that 2 is the variable cost. In other words: it's not fixed like the 100.Opportunity costs are not restricted to financial or monetary costs though. The real costs of output forgone (e.g. when choosing between a number of products like shotguns and bananas), lost time / pleasure, or any other benefit that provides benefit should also be considered opportunity costs. Therefore real costs are part of opportunity costs.
opportunity
because it has increasing opportunity costs
the opportunity cost
The value of the best foregone alternative.