An examination of opportunity cost

The following are illustrative examples. This semester you can only have one elective and you want both basket-weaving and choir.

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If the company moves, the building could be rented to someone else. An investor has already sunk money into investments, but if another investment promises greater returns, the opportunity cost of holding the underperforming asset may rise to where the rational investment option is to sell and invest in a more promising investment elsewhere.

Comparing the benefits and costs of different allocation methods in order to choose the method that is most appropriate for some specific problem can result in more effective allocations and a more effective overall allocation system.

In identifying opportunity costs, encourage students to focus on the choice itself and the benefits of the alternative, not on things that might come into play later.

Stalin, like Lenin, had to make choices about the use of resources for production and consumption.

Lesson 1: Opportunity Cost

What is your opportunity cost for the drink. Using either the summaries provided in the student materials that accompany this lesson or the information collected through previously assigned student research, small groups are to answer the following questions with regard to the decisions made by leadership of the Soviet Union: It is equally possible that, had the company chosen new equipment, there would be no effect on production efficiency, and profits would remain stable.

What to know about Opportunity Cost for the PMP Exam?

At the ice cream parlor, you have to choose between rocky road and strawberry. All of the following statements are positive except: What benefits do you give up. Continued high investment in the military and heavy industry sustained limited gains in consumer goods; Investment means resources were directed to industrial and military growth, and thus taken away from consumer production.

The opportunity cost is the drink and hot dog. What is your opportunity cost for the drink. Jorge really wants to eat at a new restaurant and can only afford it if he does not order a dessert. Salary vs Quality of Life An IT worker is offered a new job with a higher salary in a city with a lower quality of life.

Individuals will place different value on the relative benefits of a set of alternatives and will thus make different choices. National economies vary in the extent to which they rely on government directives central planning and signals from private markets to allocate scarce goods, services, and productive resources.

Productive resources are limited. The opportunity cost of going to college is the wages he gave up working full time for the number of years he was in college.

Why or why not. The difference between the potential return of the project selected and the potential return of the second best option that was not selected. If you miss work to go to a concert, your opportunity cost is the money you would have earned if you went to work plus the cost of the concert.

Rate your day so far — good day or bad day?. 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.

The cost of doing something, like studying, in terms of whatever you gave up to do it is the opportunity cost. The opportunity cost of an hour spent studying economics is two episodes of your. Concepts: Opportunity Cost Scarcity Capital Goods Choice Consumer Goods Communism Content Standards and Benchmarks (1, 3 and 15): Standard 1: Productive resources are limited.

Therefore, people cannot have all the goods and services they want; as. May 27,  · Best Answer: The "opportunity cost" is the way you described it, what you have to give up, to make an economic choice, like go to a concert for entertainment.

Total costs are the price of ticket $35, plus driving costs, $20, which together total $ Personally, I'd have included the lost wages too Status: Resolved.

What is the concept of opportunity cost?

May 26,  · Best Answer: The "opportunity cost" is the way you described it, what you have to give up, to make an economic choice, like go to a concert for entertainment. Total costs are the price of ticket $35, plus driving costs, $20, which together total $Status: Resolved.

Opportunity Cost Examples

2. All of the following are examples of opportunity cost except: A. the leisure time sacrificed to study for an exam. B. the tuition fees paid to a university.

An examination of opportunity cost
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Opportunity Cost Examples