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Opportunity cost

CA Sapna Ghelani (Chartered Accountant) (7550 Points)

18 March 2021

Meaning of opportunity cost with the help of an example

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 18 March 2021

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

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 18 March 2021

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.