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Opportunity cost is the cost of the next-best choice available to someone who has to pick between several choices. It is a key concept in economics used to describe "the basic relationship between scarcity and choice".
Opportunity cost is examined by selecting one option and then comparing the expected rewards of that option to the rewards of next option.
If a company had money to invest in either marketing or production the opportunity cost of one would be the loss of benefit form not picking the other. For example if the company chooses to invest in marketing instead of improving manufacturing (its next best option) which would increased profits $100000 the opportunity cost of the decision is said to be $100000.
If the company makes more than $100000 the company has made a good decision. If the increase in marketing does not make $100000 for the company the decision is considered not at as good as the lost opportunity-cost. It would have been more profitable to invest in the option not selected.
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What is opportunity cost rate?
The opportunity cost rate is the rate of return you could earn on an alternative investment of similar risk.
Increasing opportunity cost graph?
There are many ways in which you can show increasing opportunity cost on a graph. You could show it in comparison to satisfaction 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 is opportunity cost when referring to investors?
Although not an actual cost, opportunity cost to an investor is the income he could have earned if he had invested in the next best alternative to the one he actually made.
Opportunity cost definition?
The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
The opportunity cost of a decision can be examined by using?
production possibilities graph
What is the opportunity cost of the war in Iraq?
"Opportunity cost" could be opportunities for US/Iraqi contract employment for bettering their nation.
What is opportunity cost rate?
The opportunity cost rate is the rate of return you could earn on an alternative investment of similar risk.
Increasing opportunity cost graph?
There are many ways in which you can show increasing opportunity cost on a graph. You could show it in comparison to satisfaction 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 is opportunity cost when referring to investors?
Although not an actual cost, opportunity cost to an investor is the income he could have earned if he had invested in the next best alternative to the one he actually made.
Opportunity cost definition?
The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
What was Juan Ponce De Leon's opportunity cost?
could be a explorer and a govemor !
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 is the Opportunity cost of a particular good?
The opportunity cost of a certain good is the cost of the next best good that you are forgoing. It is NOT a sum of all the other possibilities. It is just the cost of the next best alternative. For example: The opportunity cost of going to college is the money that you could have earned in a job. Say you spend $80,000 to go to college for four years, but if you had gotten a job right out of high school, you could have made $15,000 a year. The opportunity cost of attending college is the $60,000 you would have earned if you had gotten the job right out of high school.
Define opportunity costs?
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.
What calculates the opportunity cost?
Opportunity cost is something for the next porpose.
