Definition of Opportunity cost:
A benefit, profit, or value of something that must be given up to acquire or achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost.
Opportunity costs are fundamental costs in economics, and are used in computing cost benefit analysis of a project. Such costs, however, are not recorded in the account books but are recognized in decision making by computing the cash outlays and their resulting profit or loss.
The loss of potential gain from other alternatives when one alternative is chosen.
How to use Opportunity cost in a sentence?
- The CEO of Ace Corporation considered the merger that the competing company offered him, but after examining the opportunity cost he decided that the sacrifices were too high and the benefits were too low to accept the deal.
- I would have gone to the movie since it cost less and the tickets were not refundable but I have to see this concert even if the opportunity cost doesnt make sense to most people.
- When deciding on whether or not to go back to college full-time, Jack included the opportunity cost of foregoing a stable paycheck in his decision.
- Idle cash balances represent an opportunity cost in terms of lost interest.
Meaning of Opportunity cost & Opportunity cost Definition