Opportunity cost

The opportunity cost of an activity is the value of the next best alternative use of resources that are used for the activity. In other words, opportunity cost represents the trade-off between two different choices.

For example, if someone has the option to either go to school or work, the opportunity cost of going to school is the income that the person could have earned if they had chosen to work instead.

What is opportunity cost simple definition?

According to the Investment Encyclopedia, opportunity cost is "the cost of forgoing the next best alternative use of money or resources." In other words, opportunity cost is the value of the next best alternative that is given up when a decision is made.

For example, if someone has $100 and can either spend it on a new shirt or a new pair of jeans, the opportunity cost of the new shirt is the new pair of jeans (assuming the person values the jeans more than the shirt).

What is opportunity cost known as?

The opportunity cost of a good or service is the value of the next best alternative use of that good or service. In other words, the opportunity cost is what you give up when you make a choice.

For example, if you choose to go to college, you give up the opportunity to work and earn a salary. The opportunity cost of going to college is the salary you could have earned if you had chosen to work instead.

What are 4 examples of opportunities?

1. The opportunity to streamline your business processes and improve efficiency
2. The opportunity to improve customer satisfaction by providing a better customer experience
3. The opportunity to reduce costs by automating and optimizing your processes
4. The opportunity to increase sales by providing a better product or service Which answer best defines opportunity cost? The opportunity cost of an action is the value of the best alternative forgone, or the opportunity cost of an activity is what you give up to do the activity.

Why is opportunity cost important?

In economics, opportunity cost is the value of the next best alternative use of a resource, including both time and money. The opportunity cost of an action is the highest value foregone opportunity in the best available alternative action. The term is used particularly in the context of decisions made under conditions of scarcity, where the cost of any one option is the value of the foregone options.

In a business context, opportunity cost is the cost of foregone opportunities, such as the cost of not pursuing a certain course of action in order to pursue another. The opportunity cost of a business decision is the value of the next best alternative use of the resources involved in the decision.

In personal finance, opportunity cost is the cost of foregone opportunities, such as the cost of not investing in a certain asset in order to invest in another. The opportunity cost of a personal finance decision is the value of the next best alternative use of the resources involved in the decision.