Overview
Opportunity cost is a fundamental concept in economics that helps individuals and businesses make informed decisions by considering what they give up when choosing one option over another. It emphasizes the importance of evaluating alternatives and understanding the potential benefits lost in the de...
Key Terms
Example: Choosing to invest in stocks instead of bonds incurs an opportunity cost of the returns from bonds.
Example: Choosing between spending time studying or going out with friends.
Example: A company with a profit margin of 20% keeps $0.20 of every dollar earned.
Example: Allocating budget to marketing versus product development.
Example: Deciding whether to expand a business based on market research.
Example: Analyzing a company's decision to enter a new market.