Question

Explain the concept of opportunity cost with an practical example

Answer 1

opportunity cost means new best alternative for anything

Answer 2

Oppurtunity Cost is the cost of the next best alternative.

For Example : Suppose that You are a CA. You can do either of the below two: Start your own Practise which yields an income of Rs.70,000 per month or Get Employed in any Company for Rs.60,000 per month .

If you choose to start your own practise, then you will have to sacrifice your Job in the company by which you can earn Rs.60,000.

The Rs.60,000 foregone is termed as Oppurtunity Cost.