Explain the meaning of opportunity cost with the help of an example
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Definitions and Examples of Opportunity Cost
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BY ROSEMARY PEAVLER Updated August 16, 2018
Investors are always faced with options about where to invest their money to receive the highest or safest return. The investor’s opportunity cost represents the cost of a forgone alternative. If you choose one alternative over another, then the cost of choosing that alternative becomes your opportunity cost.
If you choose not to go to work today, for example, your opportunity cost becomes your lost wages. If your friend John chooses to quit work for a whole year to go back to school, the opportunity cost of his decision is the year’s worth of lost wages.
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