Definition of Opportunity cost:
Profits, profits or the price of something that must be forgiven in order to obtain or acquire something else. Because every resource (land, money, time, etc.) can be used for a different purpose, there is a cost involved in each process, choice or decision.
Opportunity cost is the basic economic cost and is used to calculate the cost-benefit analysis of a project. However, these expenditures are not recorded in the accounts, but are accounted for in the decision-making process by calculating the outflow of funds and the resulting consequences.
When the alternative is chosen, the potential advantages over other alternatives are lost.
How to use Opportunity cost in a sentence?
- The CEO of S Corporation considered a competitor's merger plan, but, after reviewing the cost of the opportunity, decided that the sacrifices were too high and the profit too small to accept the deal.
- I go to the cinema because it is cheap and tickets are non-refundable, but I had to watch the show even though the cost of opportunities is not reasonable for most people.
- When deciding whether to return to college full time, Jack considered the cost of a stable salary opportunity.
- Passive cash balances represent opportunistic costs associated with loss of interest.
Meaning of Opportunity cost & Opportunity cost Definition