0
Opportunity Cost = Cost of Selected Alternative - Cost of Next Best Alternative
If you want to buy a dress, purse, and earrings but you don't have enough money for all three, you ask yourself what do I need/want most? That is your "selected alternative. Then you ask yourself, what is the next thing I'd need/want if I could buy it? Then you would subtract that, "cost of next best alternative" from your original item, "cost of selected alternative."
Dress= $100
Purse= $50
Earrings= $75
Opportunity cost of a dress (when you would ALSO want earrings (NBA), when having to choose over earrings or purse): 100-75= $25
$25 is the difference between the cost of the desired alternative and the cost of the next best alternative.
Wiki User
∙ 10y ago
Add your answer:
Earn +20 pts
Why are costs important in economics?
How do firms incorporate opportunity cost to calculate economic cost? discuss and give example using an explicit economic cost and an implicit economic cost.
What is the economic term for sacrifice foregone?
Opportunity cost or real cost.
What are royalties in economic s?
they are the seperation of the opportunity cost
Relevance of opportunity cost?
Opportunity cost is the economic, or real cost, of taking any action (as opposed to its accounting, or fiscal, cost). This cost is relevant as part of profit-optimising functions that determine allocations of spending and goods for economic agents.
What economic model demonstrates opportunity cost decision?
Lolliklvblphd
Why are costs important in economics?
How do firms incorporate opportunity cost to calculate economic cost? discuss and give example using an explicit economic cost and an implicit economic cost.
Opportunity cost is?
Opportunity cost is the highest-valued alternative foregone in order to take an economic action.
What is the economic term for sacrifice foregone?
Opportunity cost or real cost.
What are royalties in economic s?
they are the seperation of the opportunity cost
What is the opportunity cost formula?
opportunity cost of x is equal to y over x. The answer then becomes the slope for the graph.
Relevance of opportunity cost?
Opportunity cost is the economic, or real cost, of taking any action (as opposed to its accounting, or fiscal, cost). This cost is relevant as part of profit-optimising functions that determine allocations of spending and goods for economic agents.
What is the formula to calculate prime costs?
Formula for Prime Cost = Material Cost + Labor Cost
What economic model demonstrates opportunity cost decision?
Lolliklvblphd
What economic term for what you lose when using resources for something else?
The economic term for what you lose when using resources for something else is known as opportunity cost.
What is the formula to calculate the economic reorder quantity?
EOQ=if(Abc classification="dead stock,0,round(sqrt((2/annual forecast*order cost)/(avarage cost*inventory cost)),0))
If choosing something means you give up something else what is the economic term for this?
The economic term for the cost of a choice is the opportunity cost.
What were main economic activities of tribal people?
demand, choice and opportunity cost
