the opportunity cost principle

The Idea of Opportunity Cost A fundamental principle of economics is that every choice has an opportunity cost. ... 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.

1. What is opportunity cost explain with example?
2. What is a real life example of opportunity cost?
3. What is opportunity cost diagram?
4. Why is opportunity cost important?
5. What is opportunity cost simple words?
6. Which situation is the best example of opportunity cost?
7. How does opportunity cost affect our life?
8. What is the opportunity cost in this scenario?
9. What is opportunity cost in decision making?
10. What is opportunity cost from project point of view?
11. What is another name of opportunity cost in economics?
12. Can opportunity cost zero?

What is opportunity cost explain with 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 is a real life example of 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.

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.

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 simple words?

Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. The idea of opportunity costs is a major concept in economics. Because by definition they are unseen, opportunity costs can be easily overlooked if one is not careful.

Which situation is the best example of opportunity cost?

It is the important concept in economics and also the relationship which is between choice and scarcity. A good example of opportunity cost is you can spend money and time on other things but you can not spend time reading books or the money in doing something which can help.

How does opportunity cost affect our life?

Opportunity costs can impact various - and critical - aspects of your life, including money, career, home and family, and other lifestyle elements. In general, it means having to choose one option over the other, be it money, time or lifestyle choices - and living with the consequences.

What is the opportunity cost in this scenario?

Answer Expert Verified. 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 in decision making?

“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 is the benefits you lose by choosing one alternative over another one.”

What is opportunity cost from project point of view?

Opportunity cost is the loss of potential future return from the second best unselected project. In other words, it is the opportunity (potential return) that will not be realized when one project is selected over another.

What is another name of opportunity cost in economics?

The alternative name of opportunity cost is Economic cost.

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.