What is opportunity cost also known as?
Asked by: Vickie Feil | Last update: August 8, 2022Score: 4.6/5 (55 votes)
Opportunity cost is commonly defined as the next best alternative. Also, known as the alternative cost, it is the loss of gain which could have been gained if another alternative was chosen. It can also be explained as the loss of benefit due to a change in choice.
What are the other names of opportunity cost?
The alternative name of opportunity cost is Economic cost.
What is opportunity cost simple words?
Opportunity cost is an economics term that refers to the value of what you have to give up in order to choose something else.
Is opportunity cost also known as transfer cost?
Transfer earnings are the minimum payment required to keep a factor of production in its present use. It is the opportunity cost an individual forgoes when deciding to work in one job rather than the next best alternative. Was this answer helpful?
Why is opportunity cost called cost?
When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can't spend the money on something else.
What Is Opportunity Cost?
Which cost is also known as past cost?
A past cost is money that has already been spent. These funds cannot be recovered, so the related cost is irrelevant for decision-making purposes. A past cost is also known as a sunk cost.
What is an opportunity cost quizlet?
opportunity cost. the most desirable alternative given up as the result of a decision. thinking at the margin. the process of deciding whether to do or use one additional unit of some resource.
What is forgone alternative?
Opportunity cost is the value of the next best alternative forgone as a result of making a decision.
What does opportunity cost refer to quizlet?
Opportunity cost can best be defined as the. value of what must be given up in order to acquire an item. The term opportunity cost refers to the. value of what is forgone when a choice is made. You have just bought a used car, and drive away satisfied that you've made a good deal on the purchase.
Is choice and opportunity cost synonyms?
In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusive alternatives given limited resources.
What are implicit costs?
What Is an Implicit Cost? An implicit cost is any cost that has already occurred but not necessarily shown or reported as a separate expense. It represents an opportunity cost that arises when a company uses internal resources toward a project without any explicit compensation for the utilization of resources.
Which of the following best describes opportunity cost?
The correct answer is The difference between the alternative selected and the next best alternative.
What is the opportunity cost of a decision economics quizlet?
Opportunity cost is the value of the best alternative forgone in making any choice.
What is opportunity cost Mcq?
The opportunity cost of a given action is equal to the value foregone of all feasible alternative actions.
What is marginal cost in economics quizlet?
Marginal cost is the extra, or additional, cost of producing one more unit of output. It is the amount by which total cost and total variable cost change when one more or one less unit of output is produced.
What is scarcity and opportunity cost?
The opportunity cost of a choice is the value of the best alternative given up. Scarcity is the condition of not being able to have all of the goods and services one wants. It exists because human wants for goods and services exceed the quantity of goods and services that can be produced using all available resources.
What is opportunity cost and joint cost?
Understanding the potential missed opportunities foregone by choosing one investment over another allows for better decision-making. Joint costs are costs that are incurred from buying or producing two products at the same time. In cost accounting terms, joint costs have the same cost object.
What is scarcity and choice in economics?
Scarcity refers to the finite nature and availability of resources while choice refers to people's decisions about sharing and using those resources. The problem of scarcity and choice lies at the very heart of economics, which is the study of how individuals and society choose to allocate scarce resources.
What is the opportunity cost of an economic decision?
The opportunity cost (also called an implicit cost) of a decision is the value of what you will lose or miss out on when choosing one possibility over another.
Are also known as sunk costs?
A sunk cost, sometimes called a retrospective cost, refers to an investment already incurred that can't be recovered. Examples of sunk costs in business include marketing, research, new software installation or equipment, salaries and benefits, or facilities expenses.
What is past cost and future cost?
Past Costs:
Actual costs or historical costs are records of past costs. Future costs are based on forecasts. The costs relevant for most managerial decisions are forecasts of future costs or comparative conjunctions concerning future situations.
What is historical and replacement cost?
The historical cost of an asset refers to the actual cost incurred at the time the asset was acquired. In contrast, the replacement cost stands for the cost which must be incurred if the asset is to be purchased today. The two concepts differ due to price variations over time.
Which would be an example of an opportunity cost?
Examples of Opportunity Cost. Someone gives up going to see a movie to study for a test in order to get a good grade. The opportunity cost is the cost of the movie and the enjoyment of seeing it. At the ice cream parlor, you have to choose between rocky road and strawberry.
Why opportunity cost is the best forgone alternative?
Opportunity cost is the value of the best opportunity forgone in a particular choice. It is not simply the amount spent on that choice. The concepts of scarcity, choice, and opportunity cost are at the heart of economics. A good is scarce if the choice of one alternative requires that another be given up.
What is meant by opportunity cost principle?
The opportunity cost principle may be stated as under: “The cost involved in any decision consists of the sacrifices of alternatives required by that decision. If there are no sacrifices, there is no cost.” Thus in macro sense, the opportunity cost of more guns in an economy is less butter.