which it expects to return 10% a year, or using it to purchase new machinery. No matter which option the business chooses, the potential profit that it gives up by not investing in the other option is the opportunity cost.
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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.
The meaning of OPPORTUNITY COST is the added cost of using resources (as for production or speculative investment) that is the difference between the actual value resulting from such use and that of an alternative (such as another use of the same resourc
Opportunity costs are at the center of the economic sphere and govern the cost of every financial process. Learn more about the definition and relative calculations of opportunity cost, explore the relationship between explicit and implicit costs, and apply your understanding with examples. Cost of...
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.
Opportunity cost definition: the money or other benefits lost when pursuing a particular course of action instead of a mutually-exclusive alternative. See examples of OPPORTUNITY COST used in a sentence.
A simple opportunity cost definition fromOxford Learner’s Dictionariesis: Opportunity cost is when you choose one option and thus lose the potential benefits of the other options. Opportunity costs are a consequence of scarcity. You don’t have endless time and money to pursue each alternative. ...
A common application of opportunity cost is with business finance decisions. For example, a company may be evaluating 2 potential capital projects but only have the financing and capacity to pursue one of those projects. In such a scenario, company management will conduct research and analysis with...
Opportunity cost The definition of opportunity cost is the potential gain lost by the choice to take a different course of action when considering multiple investments or avenues of business. When weighing two or more courses of action, the opportunity cost refers to the value of the option you...