3 examples of opportunity cost

3 examples of opportunity cost Examples of opportunity cost considerations include investing in a new manufacturing plant in Los Angeles as opposed to Mexico City deciding to upgrade company equipment or hire

Studying Vs Hanging Out Choosing to study for an exam instead of hanging out with friends comes with a cost Studying for exams instead of handing out with friends will likely bring higher grades in an exam The opportunity cost in this example is the time spent with friends Fast Food Vs 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

3 examples of opportunity cost

3 examples of opportunity cost
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Opportunity Cost Explanation With Example Tutor s Tips
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What Is Opportunity Cost Definition Meaning And Calculations
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Opportunity costs are expressed in terms of how much of another good service or activity must be given up in order to pursue or produce another activity or good For example when you head out to see a movie the cost of that activity is not just the price of a movie ticket but the value of the next best alternative such as cleaning your room Another example of opportunity cost at government level is the effects of the Covid 19 pandemic Governmental responses to the COVID 19 epidemic have resulted in considerable economic and social consequences both implicit and apparent

The two types of opportunity costs are explicit opportunity cost and implicit opportunity cost Explicit opportunity cost has a direct monetary value For instance if a restaurant buys 1 000 worth of ground beef the cost is the other things that it could have purchased with that money like chicken wings or hamburger buns Verified by a Financial Expert Updated January 10 2021 What is Opportunity Cost Opportunity cost is the return on an investment opportunity you missed out on compared to the return on the investment that you chose To determine what was lost or gained opportunity cost may be calculated as a number or a ratio

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Opportunity cost refers to the value of the next best alternative forgone when a decision is made Even if resources are abundant individuals firms or societies still have to make choices about how to allocate those resources among competing alternatives Opportunity Cost Forgone Option Chosen Option When it comes to investment returns you ll just need to sub in the expected rates of return of each option

Related Decision Making Methods for the Workplace Opportunity cost examples Here are a few scenarios where opportunity cost is used to make a decision Job offer example After spending the past month interviewing Joseph is now weighing three job offers The pay for two of the offers is comparable 60 an hour Imagine for example that you spend 8 on lunch every day at work You may know perfectly well that bringing a lunch from home would cost only 3 a day so the opportunity cost of buying lunch at the restaurant is 5 each day that is the 8 that buying lunch costs minus the 3 your lunch from home would cost

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3 examples of opportunity cost - The two types of opportunity costs are explicit opportunity cost and implicit opportunity cost Explicit opportunity cost has a direct monetary value For instance if a restaurant buys 1 000 worth of ground beef the cost is the other things that it could have purchased with that money like chicken wings or hamburger buns