Opportunity costs, total costs and marginal costs What are opportunity costs? How do explicit and implicit costs relate to opportunity costs? Opportunity cost is the value of the best alternative that one gives up for the current choice or decision. It is an important concept in economics and is used for emphasizing the relationship between scarcity and choice. It is the cost sacrificed or foregone in any decision. These opportunity costs extend to all aspects of production and consumption. Two costs related to opportunity costs are explicit and implicit costs. Explicit costs is the direct monetary payment or expense that a producer incurs by choosing one option over another. For example, a firm incurs $1000 as wages for workers when it decides to produce steel pans instead of cast-iron pans and this $1000 is considered as the explicit opportunity cost for the production of steel pans. Implicit costs, on the other hand, are those that cannot be measured directly and do not involve any monetary payments. A good example is when someone chooses between working and staying at home for personal reasons. The implicit opportunity cost is the salary that is lost by not working and staying at home to pursue a passion. Â If the average total cost curve is falling, what is necessarily true of the marginal cost curve? If the average total cost curve is rising, what is necessarily true of the marginal cost curve? The total cost curve (TC) is the cost of production for a company
Opportunity cost means giving up something of value or importance to you to achieve a particular goal or outcome. It is a chance that causes you to miss out on something you want, but an individual can benefit by gaining something for the opportunity they accepted.
For each choice I make, there is an opportunity cost. Opportunity cost is the real cost of an item, what I must give up in order to
7. Opportunity costs refer to time, money, and other resources that are given up when a decision is made. TRUE
* Implicit—This cost is implicit since it is not money out of the company’s pocket, but it is not applicable since the cost is not relevant.
c) Explain how the location of each curve graphed in question 7b would be altered if (1) total fixed cost had been $100 rather than $60 and (2) total variable cost had been $10
In economics, costs can be defined as the price paid to acquire, produce, accomplish, or maintain anything. (Dictionary.reference.com, retrieved 4/6/09). Cost can be the amount paid or required in payment
2. The cost of something is what you give up to get it. - It means comparing cost and benefits of alternatives. When people choose one thing, they give up something else -> opportunity
Opportunity cost is when there are multiple options for something and there are two or more that are the best or very, very, opportunity cost is the value of not doing the next best thing. for example Anthony is either going to have a bake sale or work at Arby's, at Arby's he gets a fry and a drink along with 50 % but the bake sale is estimated to make 100$-200$ and costs 50$ so Anthony's opportunity cost for the bake sail is 50$ and some food while the opportunity cost of the Arby's is 50$-150$. For Anthony to make a smart business decision he needs to know which would be more profitable in the long run: food that causes diarrhea or the foothold in the community of being a baker. Another example of opportunity cost is the classic go to college
Sexton (2013) refers to opportunity cost as the chance given up because another choice was made instead. That means if I’m faced with two options and I can only choose one, the one I didn’t choose is the opportunity cost.
1. Opportunity costs are most simply defined as cost in terms of foregoing alternatives. This means what you potentially lose in making a choice for one thing in a decision. Stella would need to be aware that whatever resources she allocates to paying for the new car, will be removed from using them for other purposes. She should consider how much the car will cost in comparison with the other uses for her funds combined with the cost of another means of transportation. In short, for this to be a good choice, the cost of the car should be lower than the cost of the alternative uses + the cost of alternate transportation if she wishes to maximize this decision.
Opportunity cost is the value of the next best alternative in a decision. Imagine that you have $150 to see a concert. You can either see "Hot Stuff" or you can see "Good Times Band." Assume that you value Hot Stuff's concert at $225 and Good Times' concert at $150. Both concerts cost $150 per ticket, but it would take you a couple of hours to drive to Hot Stuff's concert and you have to be in school (the next) morning for an exam. Good Times' concert is right here in town. Explain how you would assess the opportunity cost of seeing Good Times in concert. What is the opportunity cost of going to Good Times' concert?
-The opportunity cost of something is what you must give up of one thing, in order to get it. Opportunity cost is a key concept of economics because it is described as expressing the basic relationship between scarcity and choice. Opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently.
Parts of opportunity cost are explicit costly (money spent along the project to make it happen, for the task to be done perfectly money and labor need to be involved, e.g. Boss paid workers for their project, students pay tuition to enroll in class and all other amenities involved.) and implicit cost (one’s time value or origin in the next best alternative. The time incorporated in order to run out the next best option).
The cost of something is what you give up to get it. Opportunity cost is defined by