What situation is the best example of opportunity cost?

For example, choosing public transportation to travel to a particular destination by foregoing the option of traveling in one’s own car is a good example of opportunity cost, because you end up saving money which needs to be spent on fuel.

What is opportunity cost in economics PPT?

Opportunity cost is the cost of a decision in terms of the best alternative given up in order to achieve it. It is the best alternative forgone.

How do you write an opportunity cost?

The formula for calculating an opportunity cost is simply the difference between the expected returns of each option. Say that you have option A—to invest in the stock market hoping to generate capital gain returns.

What is imputed cost with example?

For example, if an individual decided to go to graduate school instead of working at a job, the imputed cost would be the salary they gave up during the time they are at school. Imputed costs are usually incorporated when calculating economic costs. Economic costs would be both imputed costs and explicit costs.

What is opportunity cost in cost accounting?

Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.

What are the 2 types 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.

What are some examples of opportunity cost in economics?

The term ” opportunity cost ” comes up often in finance and economics when trying to choose one investment, either financial or capital, over another. It serves as a measure of an economic choice as compared to the next best one. For example, there is an opportunity cost of choosing to finance a company with debt over issuing stock.

What is the opportunity cost of an activity?

The opportunity cost of an activity is the value of the next-best alternative that must be forgone in order to undertake the activity. A cost that is beyond recovery at the moment a decision must be made. The increase in total cost that results from carrying out one additional unit of an activity.

What is opportunity cost kids?

Opportunity cost facts for kids. Kids Encyclopedia Facts. Opportunity cost is the value of the next best thing you give up whenever you make a decision. It is “the loss of potential gain from other alternatives when one alternative is chosen”. The idea of an opportunity cost was first begun by John Stuart Mill .