What is opportunity cost explain with the help of numerical example?
Asked by: Dr. Camilla Moore V | Last update: January 13, 2026Score: 4.7/5 (6 votes)
What is an opportunity cost example with the help of a numerical example?
If an economy can produce rice 2000 quintals of rice or 4000 quintals of wheat with the given resources and the economy chose to produce wheat then the opportunity cost will be 2000 quintals of rice which the economy has sacrificed.
What are opportunity costs and examples?
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 the best example of opportunity cost?
Standard cost. Explanation: Opportunity cost is the best example of Standard cost. Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.
What is an opportunity cost & kid example?
Have two pieces of different candy or other fun food or snack that they can choose from. Let 'em pick! Tell them that the one they didn't pick is called “The Opportunity Cost.” Have them say it out loud! In other words, Opportunity Cost is the choice not taken.
What is Opportunity Cost | Economics explainer series | Concepts in 10 minutes
What is an example of opportunity cost in math?
You assume its return on investment from investing in the stock market can be 16% over the next year. You also expect that reinvesting in the company by purchasing new equipment will render a 13% ROI over the same period of time. This means the opportunity cost of this situation is 16% minus 13%, or 3%.
Which situation is the best example of opportunity cost?
For example, choosing public transportation to travel to a particular destination by foregoing the option of traveling in one's own car is a good example of opportunity cost, because you end up saving money which needs to be spent on fuel.
What is importance of opportunity cost with examples?
Opportunity cost is important in several contexts, including: Business decisions: It helps self-employed individuals and companies choose between different projects or investments. Personal finance: It allows individuals to evaluate how to spend their time and money more effectively.
What is an example of opportunity?
Examples of opportunity in a Sentence
When the opportunity came for her to prove that she could do the job, she was ready. I had the rare opportunity of speaking to the president. Studying abroad provides a great opportunity to learn a foreign language. There are fewer job opportunities this year for graduates.
Which of the following is an example of opportunity costs?
It's the "cost" incurred by not enjoying the benefit associated with the best alternative choice. This is an example of opportunity cost because when you choose to buy a bike, you are giving up the benefits of owning a car, such as speed, comfort, and the ability to travel long distances.
What is an example of increasing opportunity cost?
For example, there might be a trade-off between hunting for rabbits or gathering berries. As one pursues more rabbits, the opportunity cost (in terms of berries given up) increases.
Is college an example of opportunity cost?
The opportunity cost of attending college refers to the value of alternative options that you're giving up in order to pursue a higher education. It's an important consideration when deciding how to invest your time and resources.
What are opportunity costs in the workplace?
As its name suggests, opportunity cost refers to the cost of choosing one opportunity over others. This “cost” reflects the value you could have gained in all the options you didn't pursue.
What is a real life example of opportunity cost?
You've got enough cash for a latte or a muffin, but not both. If you choose the latte, its opportunity cost is the muffin you could have enjoyed. This decision-making process is crucial in business and life because it forces you to weigh your options, think ahead, and avoid regrets about 'what could have been.
What is the opportunity cost of seeing a movie?
Answer and Explanation:
The opportunity cost of watching a movie involves the time and resources that a person used in watching a movie as opposed to another activity. Foremost, the money spent to see that movie could have been used to purchase a pen.
What is the correct definition of the opportunity cost of a choice?
The opportunity cost of a choice is the value of the best alternative given up. Choices involve trading off the expected value of one opportunity against the expected value of its best alternative. The evaluation of choices and opportunity costs is subjective; such evaluations differ across individuals and societies.
What is the concept of opportunity cost and examples?
An opportunity cost is the value of the option not taken when a business makes a decision. For example, if the business is deciding whether to purchase two new tractors, the opportunity cost of not doing so would be the potential revenue and profitability lost by not being able to take on another project.
What is an example of an opportunity sample?
Opportunity sampling is where a researcher selects participants based on their availability. One example would be standing on the street asking passers by to join the research.
Which example illustrates opportunity cost?
Opportunity Cost Example
Deciding whether to spend a gift card on a strawberry smoothie or a banana smoothie. Deciding whether to spend $7 every morning on coffee or consistently invest that money in a retirement account. Deciding whether to invest capital in refurbishing equipment or in better employee training.
How to calculate opportunity cost example?
- opportunity cost = return on best foregone option − return on chosen option.
- Opportunity cost = $15,000 − $12,000 = $3,000.
- Opportunity cost = $60,000 − $50,000 = $10,000.
- per unit opportunity cost = total number of units / total opportunity cost.
Which situation best describes an opportunity cost?
Final answer:
The situation that best describes an opportunity cost is B, where a person decides to go back to college, as they give up possible income and career opportunities to pursue education. Opportunity cost is the next best alternative given up when making a decision.
How do we use opportunity cost everyday?
In everyday life
Opportunity cost can cause individuals to forgo everyday luxuries and even regular experiences. For example, a person could spend $12 watching a matinee movie, or they could use it to buy lunch. If they opt for the former, they may not have money for the latter, and vice versa.
What is a good sentence for opportunity cost?
In such a case, the opportunity cost of not buying quickly is great. The problem with taking a quarterback in the first few rounds is the opportunity cost. The opportunity cost is huge, not to mention the cost to the presidency. The opportunity cost could go to projects that make millions of dollars.
How does opportunity cost affect our lives?
Often our effectiveness is diminished because we tend to ignore the opportunity cost of doing or not doing something when there isn't money involved. Not thinking about opportunity cost can greatly affect issues related to your personal productivity, goal achievement, career development, etc.
What is an example of the cost of something is what you give up to get it?
Principle #2: The cost of something is what you give up to get it. example: College education. The benefits are the job opportunities and personal satisfaction, but there are costs besides “out of pocket” costs like tuition and books.