As far the business world is concerned the term opportunity cost simply means the cost of a foregone alternative.
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- Fords8
What do you understand by the 'opportunity cost'
- Thread starter Xtynehappy
- Start date
Opportunity costs are costs that arise as a result of lost opportunities to fulfill other interests. So opportunity costs occur as a result of having two or more choices. The easiest example is that you are faced with two choices of becoming a freelance writer or working in an office. If you choose to become a freelance writer, you will lose opportunity costs such as receiving a salary every month, allowances, transportation and lunch money, etc.
it is a forgone alternative which is choosing one thing that is most significant over another
Opportunity cost is the thing that you have rather chosen to pay for instead of the other need that you have.
Opportunity cost allows you to make the right choice from several alternative options for a project and will help you to mitigate choice risks and also maximize potential opportunities.
Opportunity costs are the costs incurred from missed opportunities to pursue other interests.
If you have $1000 and you desire to buy a car and a computer for your business but the amount can only afford one of them. And you end up choosing to buy a car, the computer is the opportunity cost.
Opportunity cost is the potential benefit that an investor, business or an individual consumer misses out on when choosing one alternative over another.
Wonderful explanation! You can be a good teacher. There is nothing like using a simple illustration to teach . Even a kindergarten pupil will understand what opportunity cost means through this your illustration
We need to always apply opportunity costs to the different things we are doing. Just leave some things and go for the best.
