What is opportunity cost briefly explain?
Asked by: Agustin Runolfsson | Last update: January 6, 2023Score: 4.1/5 (4 votes)
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 explain with example?
The opportunity cost is time spent studying and that money to spend on something else. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment). A commuter takes the train to work instead of driving.
What is opportunity cost also known as?
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 is opportunity cost and types?
opportunity cost. The two types of opportunity costs are explicit opportunity cost and implicit opportunity cost. Explicit opportunity cost has a direct monetary value.
Which answer best defines opportunity cost?
Opportunity cost is defined as the value of the next best alternative.
Opportunity Cost Definition and Real World Examples
What is opportunity cost Class 11?
Opportunity cost is a concept in Economics that is defined as those values or benefits that are lost by a business, business owners or organisations when they choose one option or an alternative option over another option, in the course of making business decisions.
Why is opportunity cost important?
The concept of Opportunity Cost helps us to choose the best possible option among all the available options. It helps us use every possible resource tactfully and efficiently and hence, maximize economic profits.
What is opportunity cost explain with example class 12?
In other words, the cost of enjoying more of one good in terms of sacrificing the benefit of another good is termed as opportunity cost of the additional unit of the good. Example: We have Rs 15,000 with two choices a) to invest in the shares of a company XYZ or b) to make a fixed deposit which gives interest 9%.
What is opportunity cost Wikipedia?
When choosing an option among multiple alternatives, the opportunity cost is the gain from the alternative we forgo when making a decision. In simple terms, opportunity cost is our perceived benefit of not choosing the next best option when resources are limited.
What is an opportunity cost in business?
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.
What is opportunity cost formula?
Opportunity cost is the benefit you forego in choosing one course of action over another. You can determine the opportunity cost of choosing one investment option over another by using the following formula: Opportunity Cost = Return on Most Profitable Investment Choice - Return on Investment Chosen to Pursue.
What is opportunity cost Mcq?
The opportunity cost of a given action is equal to the value foregone of all feasible alternative actions.
Who Introduced opportunity cost?
The concept of opportunity cost was first developed by Professor Friedrich von Wieser (1914), a member of the Austrian School of Economics who exercised a strong influence on economists such as von Mises, Hayeck, or Schumpeter, the next generation of Austrian economists.
Who proposed the opportunity cost?
Frederik von Wieser is credited with having proposed this concept3 (Robbins 1934 p22, in Buchanan & Thirlby 1973, Bradley 1981 p33, Boettke and Leeson 2003, Parkin 2016, p14); but a study of his works (1888, 1891, 1892, 1927) to look for the first formal definition of opportunity costs was unsuccessful.
What is opportunity cost explain with the help of a numerical example class 11th?
In other words, the cost of enjoying more of one good in terms of sacrificing the benefit of another good is termed as opportunity cost of the additional unit of the good. Example: We have Rs 15,000 with two choices a) to invest in the shares of a company XYZ or b) to make a fixed deposit which gives interest 9%.
What are the characteristics of opportunity cost?
- Price. Perhaps one of the biggest factors is the price; although this can vary depending on income. ...
- Time. Everyone has the same 24 hours in a day. ...
- Effort. Time and effort are essentially interlinked. ...
- Utility. This is essentially the enjoyment or pleasure that the consumer receives.
How can opportunity cost affect a business?
Weighing opportunity costs allows the business to make the best possible decision. If, for instance, the company determines an alternative choice's opportunity cost is greater than what the company gains from its initial decision, the company can change its mind and pursue the alternative choice.
What is opportunity cost 2nd PUC?
It is an additional cost incurred to produce an additional output. In other words it is the net additions to the total cost when one more unit of output is produced.
What is opportunity cost Quizizz?
The opportunity cost of a good is. its price in dollars and cents. the alternative goods forgone. the price of alternative goods foregone.
Who is the father of economics?
The field began with the observations of the earliest economists, such as Adam Smith, the Scottish philosopher popularly credited with being the father of economics—although scholars were making economic observations long before Smith authored The Wealth of Nations in 1776.
What does opportunity cost have to do with economics?
As an investor, opportunity cost means that your investment choices will always have immediate and future losses or gains. Alternative definition: Opportunity cost is the loss you take to make a gain, or the loss of one gain for another gain.
What are opportunities in a business?
Opportunities. Opportunities refer to favorable external factors that could give an organization a competitive advantage. For example, if a country cuts tariffs, a car manufacturer can export its cars into a new market, increasing sales and market share.