ECONOMICS
OPPORTUNITY COST
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Detailed explanation-1: -Opportunity Cost Example Deciding whether to spend a gift card on a strawberry smoothie or a banana smoothie. Deciding whether to spend $7 every morning on coffee or consistently invest that money in a retirement account. Deciding whether to invest capital in refurbishing equipment or in better employee training.
Detailed explanation-2: -The two types of opportunity costs are explicit opportunity cost and implicit opportunity cost.
Detailed explanation-3: -Whenever a choice is made, something is given up. The opportunity cost of a choice is the value of the best alternative given up. Scarcity is the condition of not being able to have all of the goods and services one wants.
Detailed explanation-4: -A student spends three hours and $20 at the movies the night before an exam. The opportunity cost is time spent studying and that money to spend on something else. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment).