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Crystal Lim Period 5 Opportunity Cost Story Cube (Definition:a benefit,…
Crystal Lim Period 5 Opportunity Cost Story Cube
Definition:a benefit, profit, or value of something that must be given up to acquire or achieve something else.
Opportunity cost are fundamental cost in economics, and are used in computing cost benefit analysis of a project.
Opportunity cost refers to a benefit that a person could have received, but gave up, to take another course of action.
In investing, it is the difference in return between a chosen investment and one that is necessarily passed up.
Opportunity Cost = Return of Most Lucrative Option - Return of Chosen Option
When making big decisions like buying a home or starting a business, you will likely scrupulously research the pros and cons of your financial decision, but most of our day-to-day choices aren't made with a full understanding of the potential opportunity costs.
Opportunity cost is the cost of a foregone alternative. If you chose one alternative over another, then the cost of choosing that alternative is an opportunity cost.
Opportunity cost describes the returns that could have been earned if the money was invested in another instrument.
The benefit or value that was given up can refer to decisions in your personal life, in a company, in the economy, in the environment, or on a governmental level.
In economic terms, the opportunities forgone in the choice of one expenditure over others.
It is the opposite of the benefit that would have been gained had an action, not taken, been taken—the missed opportunity.
Most business owners do consider opportunity costs whenever they make a decision about which of two possible actions to take.
Opportunity cost is usually defined in terms of money, but it may also be considered in terms of time, person-hours, mechanical output, or any other finite resource.
When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource.
Bibliography
http://www.businessdictionary.com/definition/opportunity-cost.html
https://www.thebalance.com/opportunity-cost-definition-393313
http://www.investopedia.com/terms/o/opportunitycost.asp
http://examples.yourdictionary.com/opportunity-cost-examples.html
https://www.britannica.com/topic/opportunity-cost
https://www.inc.com/encyclopedia/opportunity-cost.html
http://www.econlib.org/library/Enc/OpportunityCost.html
http://www.netmba.com/econ/micro/cost/opportunity/
Pictures of Opportunity Cost
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Examples
For example, there is an opportunity cost over choosing an investment in bonds over an investment in stocks.
When trying to choose one investment, either financial or capital, over another.
Your life is the result of your past decisions. That, essentially, is the definition of opportunity cost.
At the ice cream parlor, you have to choose between rocky road and strawberry. When you choose rocky road, the opportunity cost is the enjoyment of the strawberry.
A business owns its building. If the company moves, the building could be rented to someone else.The opportunity cost of staying there is the amount of rent the company would get.
As a consultant, you get $75 an hour. Instead of working one might, you go to a concert that costs $25 and lasts two hours. The opportunity cost of the concert is $150 for two hours of work.
Tony buys a pizza and with that same amount of money he could have bought a Coke and a hot dog. The opportunity cost is the Coke and hot dog.
Mr. Brown makes $400 an hour as an attorney and is considering paying someone $1000 to paint his house. If he decides to do it himself, it will take four hours. His opportunity cost for doing it himself is the lost wages for four hours, or $1600.
Jorge really wants to eat at a new restaurant and can only afford it if he does not order a beverage. The opportunity cost is the beverage.
