Opportunity cost

Cost Accounts 120 views 3 replies

Meaning of opportunity cost with the help of an example

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Opportunity. Cost = return from next best opportunity chosen - return from option chosen.

example, your doing a business of buying and selling plots. Best opportunity building will make you 3 lakhs Profit, but the building you purchased will give you 2 lakhs profit, and the opportunity cost lost is 1 lakh and vice versa 

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.

Opportunity cost is the profit lost when one alternative is selected over another.It the next best alternative cost.

Example - Use your savings to go on a vacation or buy an asset from the same money.


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