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Opportunity cost is the cost that one incurs from not taking an action as compared to taking another action. Stock markets are a good example of this. Say you can invest in company A and company B. You invest for 6 months. Let's say you chose company A. Over those six months, company A's stock price goes up by $5 and company B's price goes up by $11. You made a profit of $5 per share. But your opportunity cost was $6 because you could have invested in company B and made $6 more. This is important because your money would have been more efficiently spent on company B (and economics is all about efficiency). Out of pocket costs are costs that you would directly incur for any given action. Back to the Stock Market example. Say your broker charges you $1 to buy a share in company A and $2 to invest in company B. Those costs are out of pocket.
One important point is that you may know what your opportunity costs are. In the stock market example you do not know what your opportunity costs are, but in many situations this is not the case.
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What is opportunity cost and opportunity benefit?
Opportunity cost is the cost that an opportunity presents. The opportunity benefit is the benefit of the opportunity that is being presented.
What does the word opportunity cost means?
Opportunity cost means that there is an opportunity to get something in a lower cost. __by Alondra Rico
What calculates the opportunity cost?
Opportunity cost is something for the next porpose.
Is opportunity cost a relevant cost?
Yes, opportunity cost is a relevant cost because it can be used in something more productive.
What do you understand by the term opportunity cost?
Opportunity cost is what you give up in order to get something else. Paying money is the opportunity cost for ice cream for example.
What is opportunity cost and opportunity benefit?
Opportunity cost is the cost that an opportunity presents. The opportunity benefit is the benefit of the opportunity that is being presented.
What does the word opportunity cost means?
Opportunity cost means that there is an opportunity to get something in a lower cost. __by Alondra Rico
How much does a pocket knife cost?
A pocket knife can cost from $0.20-$1.000
What calculates the opportunity cost?
Opportunity cost is something for the next porpose.
Is opportunity cost a relevant cost?
Yes, opportunity cost is a relevant cost because it can be used in something more productive.
What do you understand by the term opportunity cost?
Opportunity cost is what you give up in order to get something else. Paying money is the opportunity cost for ice cream for example.
Why does opportunity cost vary?
Opportunity Cost can vary depending on what you are giving up exactly.
What does increasing marginal opportunity cost mean?
As we decide to choose more units of anything, the opportunity cost of each additional unit will rise. This means that the opportunity cost of the second unit will be greater than that of the first unit. The opportunity cost of the third unit will be greater than that of the second unit. And so forththe law of opportunity cost states that the more of a product that is produced,the greater is its opportunity cost,hence increasing marginal opportunity cost in simple terms refers to an extra or additional opportunity cost of foregoing other products to produce a unit of another product
What is the difference between constant opportunity cost and increasing opportunity cost?
Real cost is the price which is real not a fake price
Why do you need to understand Opportunity cost?
Opportunity cost is fundamental in understanding the true economist cost (and thus profitability) of actions.
Opportunity cost of holding money?
The opportunity cost of holding money is the nominal interest rate.
How does scarce resources give rise to opportunity cost?
The scarcer the resourse the greater the opportunity cost
