ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Opportunity cost is
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Finance to be borrowed to buy the goods held in storage
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the most favorable alternative use of the capital tied up in inventories
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Either A or B
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None of the above
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Explanation:
Detailed explanation-1: -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 cannot spend the money on something else.
Detailed explanation-2: -The opportunity cost of capital definition is the return on investment a company or an individual loses because they choose to invest their funds in another project rather than invest it in a security that provides a return.
There is 1 question to complete.