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Topic: Opportunity cost

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  Opportunity cost - Wikipedia, the free encyclopedia
In economics, opportunity cost, or economic cost, is the cost of something in terms of an opportunity forgone (and the benefits that could be received from that opportunity), or the most valuable forgone alternative (or highest-valued option forgone), i.e.
Opportunity cost has been seen as the foundation of the marginal theory of value.
For example: Sunk costs should not be included in opportunity costs because once that cost is incurred, sunk costs are not part of the firm's alternatives because they cannot be put to alternative use.
en.wikipedia.org /wiki/Opportunity_cost   (488 words)

 Cost - Wikipedia, the free encyclopedia
Opportunity cost, also referred to as economic cost is the value of the best alternative that was not chosen in order to pursue the current endeavour--i.e., what could have been accomplished with the resources expended in the undertaking.
External costs (also called externalities), in contrast, are the costs that people other than the buyer are forced to pay as a result of the transaction.
A psychic cost is a subset of social costs that specifically represent the costs of added stress or losses to quality of life.
en.wikipedia.org /wiki/Cost   (734 words)

 Opportunity Cost
While the cost of a good or service often is thought of in monetary terms, the opportunity cost of a decision is based on what must be given up (the next best alternative) as a result of the decision.
This is the monetary cost of the education.
Opportunity cost is useful when evaluating the cost and benefit of choices.
www.netmba.com /econ/micro/cost/opportunity   (477 words)

 Opportunity cost Summary
In the example, if the person had chosen to keep your job, then the opportunity cost is the benefit of going to school, including the intangible benefits of pleasure, social interaction, and personal fulfillment as well as the tangible benefit of an increased future salary for their remaining working life.
Opportunity cost is a term used in economics to mean the cost of something in terms of an opportunity forgone (and the benefits that could be received from that opportunity), or the most valuable forgone alternative.
The consideration of opportunity costs is one of the key differences between the concepts of economic cost and accounting cost.
www.bookrags.com /Opportunity_cost   (1288 words)

 Cost: A Glossary of Political Economy Terms - Dr. Paul M. Johnson
Unless otherwise specified, when economists say "cost," they mean opportunity cost -- that is, the highest valued alternative that must be sacrificed to attain something or otherwise satisfy a want.
For example, the opportunity cost of a spur-of-the-moment decision to go to the movies Tuesday afternoon instead of going in to work is not just the six dollars for the ticket plus the gasoline and wear and tear on the car to get there.
In a more extreme vein, the opportunity cost of committing suicide is not simply the money outlay for the necessary equipment, but rather the value of the total range of future satisfactions one might otherwise be able to achieve.
www.auburn.edu /~johnspm/gloss/cost   (329 words)

 Catallarchy » Opportunity Cost Puzzle   (Site not responding. Last check: 2007-10-20)
The opportunity cost of putting the TV in the den is the foregone utility from the next most favored use of the TV whether that is selling it, smashing it, or using it as a canvas for a conceptual art project.
Opportunity costs are always associated with a single choice, and exist irrespective of chains of choices and actions that may or may not follow.
Else, the opportunity cost for #1 is #3.
catallarchy.net /blog/archives/2004/11/10/opportunity-cost-puzzle   (5113 words)

 Cost and Production
Economic costs are subjective -- seen from the perspective of a decision maker not a detached observer -- and prospective.
Hence, from an accountant’s standpoint, costs are objective -- seen from the perspective of a detached observer -- and retrospective.
Accounting cost measures are used in the evaluation of managerial performance (usually together with information on income) and as a basis for economic cost estimation.
www.willamette.edu /~fthompso/ManEX/Sem119-Costs/Cost.html   (2105 words)

 Opportunity Cost
An opportunity cost is defined as the value of a forgone activity or alternative when another item or activity is chosen.
Opportunity cost is an important economic concept that finds application in a wide range of business decisions.
The opportunity cost may also include the peace of mind for the investor having his money invested in a professionally managed fund or the sleep lost after watching his stock fall 15 percent in the first market correction while the mutual fund's losses were minimal.
www.referenceforbusiness.com /management/Ob-Or/Opportunity-Cost.html   (716 words)

The opportunity cost of a gallon of gasoline is 2 gallons of ethanol.
The term "Total cost" is used to refer to the whole table, representing the relationship between output flow and cost flow.
Fixed cost is a function of Q (quantity per unit of time) in the trivial sense that it's a constant function.
hadm.sph.sc.edu /Courses/Econ/Classes/Cost/intro/cost.html   (2241 words)

 Macroeconomics - 2. Opportunity Cost, Specialization, and Trade
Opportunity cost is measured by the slope of the PPC (the change in along y-axis divided by the change along the x-axis).
The economist would say that the opportunity cost to society for taking resources from expanding industries (such as computer technology) to invest in declining industries may be so high that the use of antiquated machinery by declining firms is perfectly efficient.
In a graph of the PPC the opportunity cost of the good represented on the horizontal axis is measured as the slope on the PPC.
mason.gmu.edu /~tlidderd/104/ch2Lect.html   (5139 words)

The opportunity cost of the next half hour devoted to this essay is a half hour of time which could have been devoted to preparation for my class at 8 a.m.
The opportunity cost of a career in higher education is a foregone career in business, industry, finance, medicine, or ministry.
Since opportunity cost is the highest-valued alternative foregone by the individual, it is entirely subjective.
facweb.furman.edu /~dstanford/relecon/opcost.htm   (797 words)

 Opportunity Cost, by David R. Henderson: The Concise Encyclopedia of Economics: Library of Economics and Liberty
When economists refer to the "opportunity cost" of a resource, they mean the value of the next-highest-valued alternative use of that resource.
The cost of using something is already the value of the highest-valued alternative use.
This is not a true cost of attending school at all, because whether or not the student attends school, someone must pay room and board.
www.econlib.org /library/Enc/OpportunityCost.html   (420 words)

 Tutor2u - Opportunity Cost
Many examples of opportunity cost exist at the level of the individual, the household, the firm, the government and the economy:
The opportunity cost of using arable farm land to produce wheat is that the land cannot be used in that production period to harvest potatoes
When we are considering the opportunity costs of decisions we make, we must use the highest-valued alternative that has had to be sacrificed for the option we have chosen.
www.tutor2u.net /economics/content/topics/introduction/opportunity_cost.htm   (465 words)

 Opportunity Cost Doctrine
Price is determined by cost rather than utility, but by cost in a physical technical sense, not that of pain or sacrifice...Comparisons of sacrifice, however, may be and commonly are involved in greater or lesser degree, and the operation of the utility principle is the basis of the whole process of adjustment.
The opportunity costs faced by agent A are easily computed: the opportunity cost of a deer is 5 rabbits, or, equivalently, the opportunity cost of a rabbit is 1/5 of a deer.
For agent B, the opportunity cost of deer is 10 rabbits or, conversely, the opportunity cost of rabbit is 1/10 of a deer.
cepa.newschool.edu /het/essays/margrev/oppcost.htm   (4191 words)

 Opportunity Cost   (Site not responding. Last check: 2007-10-20)
The return she could have gotten on another investment is the opportunity cost of her own funds invested in the business.
This is an implicit cost, and in this case the implicit cost is part of the cost of capital and probably a fixed cost.
All labor costs will be expressed in money terms (though benefits and bonuses have to be included), since the shareholders don't supply labor to the corporation as "Mom and Pop" do in a family proprietorship.
william-king.www.drexel.edu /top/prin/txt/Cost/cost3.html   (525 words)

 Econ 310
Historical cost indicates market conditions at time of purchase, and is used in tax analysis, while current cost, which reflects current market conditions, is more relevant in valuation and cost analysis at the managerial level.
The opportunity cost of an asset (or, more generally, of a choice) is the highest valued opportunity that must be passed up to allow current use.
Fixed costs are the costs associated with the fixed inputs that define the economic short run.
www.humboldt.edu /~microeco/cost.htm   (2427 words)

 Definition of opportunity cost -Tyner Blain
Opportunity cost is a financial metric generally applied to investment decisions made by companies.
Opportunity cost is the “lost opportunity”, of the best alternate way to spend the money.
The opportunity cost for our website project is $120,000, the value of investing in bonds.
tynerblain.com /blog/2006/02/24/definition-of-opportunity-cost   (965 words)

 opportunity cost Definition
The cost of passing up the next best choice when making a decision.
For example, if an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose the asset could have been used for.
Opportunity cost analysis is an important part of a company's decision-making processes, but is not treated as an actual cost in any financial statement.
www.investorwords.com /3470/opportunity_cost.html   (102 words)

 arbyte.us: Opportunity Cost and Stock Option Expensing
The purpose of the concept of opportunity cost is to remind us of the pervasive influence of scarcity and therefore the need to weigh our alternatives consciously in an effort to maximize the value we obtain from our choices.
The $10 is the opportunity cost — the difference in outcomes between two mutually exclusive alternatives.
This seems to me to be an opportunity cost that should be accounted for, but the appropriate value to be assigned is the replacement cost, not the wholesale or retail price.
arbyte.us /blog_archive/2003/11/Opportunity_Cost.html   (944 words)

 Opportunity cost - ZWiki
Only the costs to a buyer and seller are represented when items are sold in a free market.
Critics of capitalism claim that this inability to account for social costs leads to major environmental damage and geopolitical strife, not to mention societal ills; and that a capitalist society is ultimately self-destructive.
Rational economic actors are often led to decrease their own costs by pushing costs onto unconsenting third parties.
wiki.zmag.org /Opportunity_cost   (867 words)

 Economics Basics: Production Possibility Frontier, Growth, Opportunity Cost and Trade
Opportunity cost is the value of what is foregone in order to have something else.
The opportunity cost of an individual's decisions, therefore, is determined by his or her needs, wants, time and resources (income).
Giving up these opportunities to go to the movies may be a cost that is too high for this person, leading him or her to choose the less expensive service.
www.investopedia.com /university/economics/economics2.asp   (1575 words)

 Opportunity Cost   (Site not responding. Last check: 2007-10-20)
opportunity cost of an action is the next best foregone alternative.
opportunity cost principle states the cost of one good in terms of the next best alternative.
The opportunity cost of his carrot harvest is the alternative crop that might have been grown instead (eg potatoes).
www.woodgreen.oxon.sch.uk /economics/market_systems/micro_theory/opp_cost.htm   (147 words)

 Division of Labour: Comment on Opportunity Cost
Hence, total opportunity costs are $50 (not $10) as $50 is the foregone benefit of not seeing Dylan.
Let us remember that the most important lesson we learn from an analysis of opportunity cost is that failure to consider the foregone benefits will generally lead to a non-ultility or non-profit maximizing decision.
There are two things, however, that are eminently clear to me. First, whether one said the opportunity cost was $10 or $50, the correct economic decision would have been made so long as the forgone benefits entered into the decision-making calculus.
divisionoflabour.com /archives/001666.php   (2058 words)

 CoreWeb :: Economics for Developers: Understanding Opportunity Cost   (Site not responding. Last check: 2007-10-20)
The accounting cost to the firm is $2,000, but the opportunity cost is potentially much higher.
The opportunity cost to the firm of not re-writing the report is the extra money in wages that must be paid to the accountant who runs the report, and the forgone interest on that money paid.
Economists call this the user cost of capital: more formally, the opportunity cost that is incurred as a consequence of owning and using an asset.
developer.coreweb.com /articles/Default11.aspx   (1812 words)

 Economics notes: Opportunity cost -- Palmer and Raftery 318 (7197): 1551 -- BMJ
The concept of opportunity cost is fundamental to the economist's view of costs.
Opportunity cost can be assessed directly with cost effectiveness or cost utility studies.
Posnett J, Jan S. Indirect cost in economic evaluation: the opportunity cost of unpaid inputs.
www.bmj.com /cgi/content/full/318/7197/1551   (794 words)

 opportunity cost definition - Dictionary - MSN Encarta
opportunity cost definition - Dictionary - MSN Encarta
cost of business decision made: the cost of a commercial decision regarded as the value of the alternative that is forgone.
For example, if the choice is between using a machine or scrapping it, the opportunity cost is the scrap value.
encarta.msn.com /dictionary_1861697272/opportunity_cost.html   (87 words)

 TomPaine.com - The Opportunity Cost Of War
Economists call this an ‘opportunity cost.’ Congress has so far spent nearly $320 billion on the war.  But all of these dollars are dollars that could have been directed toward meeting other needs and investing in our future.
In the run up to the Iraq War, the American public was not made aware of the enormous cost of military operations and the possibility of a protracted involvement.
Yet, three and a half years later, the American public is increasingly recognizing that the costs have been too high and the benefits are altogether unclear.
www.tompaine.com /articles/2006/09/28/the_opportunity_cost_of_war.php   (986 words)

 Wired 4.11: Opportunity Cost
At the heart of that rule - and the core of Apple's problem - is the inadequately appreciated economic concept of opportunity cost, in effect the cost of not doing something.
Apple's early and ongoing dependence on education for a large share of its sales and income led the company to commit too much of its resources to a market that will never be more than a niche in the overall computer industry, much less in the whole "information'' sector.
It's another aspect of opportunity cost: winning the battle and losing the war.
www.wired.com /wired/archive/4.11/es_apple.html   (771 words)

 Opportunity Cost
Unit Goal:  The students will learn about decision-making and will understand the concept of an opportunity cost in relation to direct costs and benefits.
Unit Objective:  Having learned about making decisions, students will identify more than 14 out of 20 benefits, direct costs and opportunity costs from 6 given decision scenarios that are presented on a test given October 12, 2004.
  The cost of the essay was the time that it takes, the paper that you write on and the ink that you use.
coe.ksu.edu /pop/lessons/gen03.htm   (1178 words)

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