Opportunity Cost: - Opportunity Cost refers to the Value of Benefits scarified/forgone when one course of action is chosen, in preference to an alternative.
For Example: -
· The opportunity cost of using a machine to produce a particular product is the earnings foregone that would have been possible if the machine was used to produce other products.
· The opportunity cost of funds invested in a business is the interest that could have been earned by investing the funds in bank deposit.
· The opportunity cost of one’s time is the salary which he would have earned by his profession.
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