Cost of Opportunity

In microeconomic theory, the opportunity cost of a choice is the benefit of the best alternative forgone, in a situation in which a decision needs to be produced between a number of mutually exclusive alternatives given limited resources. Presuming the best choice is produced, it is the " cost" incurred by not enjoying the main benefit that would be acquired by taking the second best choice offered.[1] The New Oxford American Book defines that as " the loss of potential gain from other alternatives once one alternative is chosen". Opportunity cost is a key concept in economics, and has been described as revealing " the essential relationship between scarcity and choice".[2] The notion of opportunity cost performs a crucial part in ensuring that scarce resources are used effectively.[3] Thus, option costs are not restricted to economic or monetary costs: the actual cost of output forgone, misplaced time, satisfaction or any other benefit that delivers utility should also be considered option costs. Material [hide]

1 History

2 Chance costs in consumption

a few Opportunity costs in creation

3. you Explicit costs

3. a couple of Implicit costs

4 Non-monetary opportunity costs

5 Analysis

6 Find also

7 References

8 External links

History [edit]

The term was coined in 1914 by Austrian economist Friedrich von Wieser in his book " Theorie jeder gesellschaftlichen Wirtschaft".[4] It was initially described in 1848 by simply French time-honored economist FrГ©dГ©ric Bastiat in the essay " What Is Found and Precisely what is Not Seen". Opportunity costs in intake [edit]

Opportunity cost may be expressed with regards to anything which can be of value. For example , an individual may decide to use a period of vacation time for travel around rather than to perform household vehicle repairs. The opportunity expense of the trip could be considered the forgone home remodelling.[citation needed] Opportunity costs in production [edit]

Opportunity costs may be examined in the decision-making process of development. If the employees on a farmville farm can produce both...



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