opportunity cost example

A student spends three hours and $20 at the movies the night before an exam. 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).

1. What is opportunity cost give example?
2. What are the three examples of opportunity cost?
3. What is meant by opportunity cost?
4. What is the opportunity cost of an item?
5. Why is opportunity cost important?
6. What is opportunity cost in this scenario?
7. What is opportunity cost diagram?
8. What is opportunity cost explain with numerical example?
9. Can opportunity cost zero?

What is opportunity cost give example?

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 are the three examples of opportunity cost?

Opportunity Cost Examples

• Someone gives up going to see a movie to study for a test in order to get a good grade. ...
• At the ice cream parlor, you have to choose between rocky road and strawberry. ...
• A player attends baseball training to be a better player instead of taking a vacation. ...
• Jill decides to take the bus to work instead of driving.

What is meant by opportunity cost?

What Is Opportunity Cost? Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. ... Understanding the potential missed opportunities foregone by choosing one investment over another allows for better decision-making.

What is the opportunity cost of an item?

Economists use the term opportunity cost to indicate what must be given up to obtain something that's desired. ... The idea behind opportunity cost is that the cost of one item is the lost opportunity to do or consume something else; in short, opportunity cost is the value of the next best alternative.

Why is opportunity cost important?

Opportunity Cost helps a manufacturer to determine whether to produce or not. He can assess the economic benefit of going for a production activity by comparing it with the option of not producing at all. He may invest the same amount of money, time, and resources in another business or Opportunity.

What is opportunity cost in this scenario?

The opportunity cost in this scenario is the three lost opportunities Harry experiences by deciding to go to his parents house. The term opportunity cost refers to the loss of potential gain from other alternatives when one alternative is chosen.

What is opportunity cost diagram?

Definition – Opportunity cost is the next best alternative foregone. If we spend that £20 on a textbook, the opportunity cost is the restaurant meal we cannot afford to pay. If you decide to spend two hours studying on a Friday night. The opportunity cost is that you cannot have those two hours for leisure.

What is opportunity cost explain with numerical example?

Explain with the help of a numerical example. An opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. ... However if company's return is only 3% when we could have made a return of 9% from FD, then our opportunity cost is (9% - 3% = 6%).

Can opportunity cost zero?

In general, opportunity cost of a resource is zero only when there is general unemployment of resources, including manpower. If there is unemployment of labour, but no idle equipment, it would be possible to build more hospitals by utilising the surplus labour.