Nobody downloaded yet

Opportunity cost - Essay Example

Comments (0) Cite this document
These resources have competing uses and it is the task of the economic agents to make the allocation of the scare resources among the different uses…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER98.7% of users find it useful
Opportunity cost
Read TextPreview

Extract of sample "Opportunity cost"

Download file to see previous pages The word cost in the context of economic production is defined as the opportunity cost of producing any good or service. It is considered to be the value that the factors of production or the resources could have generated if they were utilized for the next best use. In other words the opportunity cost is the sacrifice of the next best alternative that is made by consumption or production of a good or service. Thus when the resources are limited an individual has to make choices between the different alternatives. Accordingly by choosing one alternative he gives up the opportunity for enjoying the other remaining alternatives that he has not opted for. This is known as the opportunity cost of consumption or production. Hence it is the most important element in the context of economic that helps in the determination of the choice between the scare resource and the efficient allocation of the resources. Hence the opportunity cost is not only the money value that is given up for one particular choice but also the time costs and the psychological costs that are paid for the non-consumption of a product or service.
This can be explained with the following example. A person having $10 may decide either to buy a book or an ice cream. If the person buys a book he would have to give up his opportunity to buy the ice cream and enjoy it. On the other hand if he buys an ice cream he gives up the opportunity to read the book. In both the cases the person has to pay an opportunity cost for choosing one option over the other (Samuelson 17).
The concept of opportunity cost is used mostly in the context of production decisions. The main factors of production include capital and labor. Suppose a person works in a factory and he earns $10 per day. On the other hand he could have worked in his own farm and could have earned $ 7 a day and could have enjoyed labor for a longer time. Therefore by ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Opportunity cost Essay Example | Topics and Well Written Essays - 1000 words - 1”, n.d.)
Opportunity cost Essay Example | Topics and Well Written Essays - 1000 words - 1. Retrieved from
(Opportunity Cost Essay Example | Topics and Well Written Essays - 1000 Words - 1)
Opportunity Cost Essay Example | Topics and Well Written Essays - 1000 Words - 1.
“Opportunity Cost Essay Example | Topics and Well Written Essays - 1000 Words - 1”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document


Opportunity Cost of Going to College, Marginal Analysis

...?Answers Opportunity Cost Opportunity cost of going to college Opportunity cost in economic terms is the cost of forgoing or sacrificing the consumption of one commodity or service in order to consume and derive utility from any other service or commodity. For computing opportunity cost of any commodity one has to take into account the next best substitute that has to be forgone or sacrificed. Under economies we generally compute opportunity cost in monetary terms. Considering the opportunity cost of going to college the...
11 Pages(2750 words)Essay

Macroeconomics: Product Possibilities and Opportunity Cost

...?Macroeconomics Section One: a. Production Possibilities and Opportunity Cost The topic on Production Possibilities and Opportunity Cost is a major topic in chapter 2. The chapter addresses the topic based on PPF and marginal cost. Marginal cost is the extra cost incurred from producing of more of a commodity in the expense of another commodity. In other words, the marginal cost is the opportunity cost incurred from a production decision. According to Caroline Henshaw’s article, production of biofuels will result into a drastic increase in food prices. This article indicates that biofuels are unlikely to produce the expected energy solutions but they will instead create new energy problems. This article is related to the topic... on...
3 Pages(750 words)Essay

Opportunity cost of corruption

...MACROECONOMICS OPPORTUNITY COST OF CORRUPTION Prepared by Submitted to Word Count Abstract The research is aiming to find the impact of corruption on the economy of the country and the people as individuals. What are the sources and consequences of corruption The results are based on the empirical study and search work available on the Internet. By combining these two research method, a thorough investigate is made. The overall research question or the main objective of the study is as follows: The impact of corruption and its cost on economic development of individuals and the country as a whole. The results of the study and research leaded to outcome that corruption...
8 Pages(2000 words)Essay

Opportunity Cost: The Cost of Taking Time to Read

...Opportunity Cost: The Cost of Taking Time to Read The cost of Random House books, after an adjustment for inflation, has never been a bigger bargain. Yet, though their cost is as low as they have been in the past century, sales continue to slide. In a traditional business model, we would expect lower prices to increase sales. However, there is another variable that needs to be taken into account. The consumer is not only concerned about the cost at the bookstore, they are also aware of the time that they must give up to read the book. The value that the consumer places on that time is known as the opportunity...
2 Pages(500 words)Essay

Opportunity Cost

...Opportunity Cost Opportunity cost is one of the topics in microeconomics that focuses on situations whereby investors have to make important decisions regarding allocation of the available resources. This paper focuses on the scarcity of resources as a reason why households and firms have to subject their alternatives to analysis resulting in opportunity cost. Government taxes and levies have been highlighted as some of the factors that lead to scarcity of resources portrayed in the paper as a major constraint. Environmental impact has also been discussed as a major factor leading to opportunity cost. A solution has been proposed to empower consumers and firms economically to help them satisfy their needs without sacrificing more... ...
7 Pages(1750 words)Term Paper

The Opportunity Cost of College

.... The Opportunity Cost of College What is your opportunity cost of attending college full time this year? What was the best alternative you gave up? If you held a full-time job, you have some idea of the income you gave up to attend college. Suppose you expected to earn $20,000 a year, after taxes, from a full-time job. As a full-time college student, you plan to work part time during the academic year and full time during the summer, earning a total of $10,000 after taxes. Thus, by attending college this year, you gave up after-tax earnings of $10,000 (= $20,000 – $10,000). There is also the direct cost of college itself. Suppose you are paying $6,000...
1 Pages(250 words)Case Study

Opportunity cost

...Opportunity Cost In the economics domain, there are three closely related terms that are used not interchangeably but in tandem to relay economic matters in the best palatable way. These are, scarcity, choice and opportunity cost. The three terms are used in the economic domain which is defined as the means of making deliberate production, distribution and the final utilization of the resources within the human society (Ojediran 76). In respect to this the definition of the three terms becomes handy. Scarcity is the tendency of the goods and services to be limited in supply necessitating choice of one of the very many options available and this leads to the...
2 Pages(500 words)Essay

Opportunity cost direct and indirect cost.&marginal cost, average cost and sunk cost

...Opportunity cost, direct and indirect cost, marginal cost, average cost and sunk cost Q1. In an opportunity cost situation, indirect costs are greater than the direct costs. Two months ago, I would have earned $50 to work for five straight rush hours. The work required watching a neighbor’s store. However, I preferred watching the Justin Beeber concert. The concert cost was $20. The transportation cost to attend the popular Justin Beeber concert was $15. The concert costs are direct cost. Evidently,...
2 Pages(500 words)Assignment

Opportunity cost

...Opportunity cost July 05, Opportunity cost Business organizations operate with the aim of making profit and costs play an important role in decisions for optimal profit margins. Decisions are therefore made to derive maximum value from expenditure. Similarly, cost decisions in daily lives aims at optimal utilities and these establishes significance of opportunity cost as resource constraints may dictate expenditure on limited items. This paper discusses the concept of opportunity cost through exploring definition of the concept and its two types, explicit and implicit...
2 Pages(500 words)Essay

Opportunity Cost

...International Economics; Questions & answers Question a Developing country of Sud Corn T.V 100,000 0 0 1000 The opportunity cost of 1000 television sets is 100,000 bushels of corn, therefore opportunity cost of producing a television set is given as, (1 x 100,000)/1000 100 The opportunity cost of 100,000 bushels of corn is 10,000 television sets, therefore the opportunity cost of a bushel of corn in this country is giving as, (1 x 1000)/ 100,000 0.01 The first ratio means that for developing country of Sud to produce additional unit of a television set, it must forgo 100 bushels of corn. On the other...
1 Pages(250 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Opportunity cost for FREE!

Contact Us