This is perhaps one of the most important factors. choose a close substitute instead. This is the next-best product but is one that you 1.1.5 Opportunity Cost: Numeric Example3 3:42. For example, we may purchase a Croissant on the way to work. Often, money becomes the root cause of decision-making. Introduction to Opportunity Costs Examples. We choose this over having breakfast at home or sitting down in a restaurant for a full breakfast. ayoogunyemi ayoogunyemi Answer: Explanation: Opportunity cost is an economics tool that is useful in the process of making a choice of goods and services in order to ensure that scarce resources are used efficiently. As company does not have enough resources to manufacture both of them so it will have to choose one of them. Examples of opportunity cost. However, because we make so many decisions every day, our brain stores previous decisions we made and uses them to help speed up the decision process. Lesson summary: Opportunity cost and the PPC. This can include an employee’s wages, rent, or raw materials. If you inherit $15,000 from a long-lost aunt, what can you do with it? For example, a food company may spend $10,000 on a market research study to assess whether repackaging their orange juice will make a difference in brand recognition and awareness. However, these costs are small For example, Bill Gates dropped out of college. The value that the consumer receives is known as the consumer surplus, which is simply the additional value they receive from consuming the product below their willingness to pay. Your friend will compare the opportunity cost of lost wages with the benefits of receiving a higher education degree. WRITTEN BY PAUL BOYCE | Updated 6 November 2020. Log in. Search. All other trademarks and copyrights are the property of their respective owners. Suppose alpha is expected to render Rs. Opportunity is the cost of making one decision over another. In addition, most of these examples … foregone. The opportunity cost, in this case, is the increased lifetime earnings that would have resulted from graduation--that is, you chose to forgo the gain in earnings when you use the money to purchase stock instead. For example, company have the option of manufacturing either alpha or beta. Join now. Time and effort are essentially interlinked. Provide an example of opportunity cost from either your personal or professional experiences. This could be updated machinery, a marketing campaign, or a bonus for its employees. Examples of opportunity costs . If your friend chooses to quit work for a whole year to go back to school, for example, the opportunity cost of this decision is the year’s worth of lost wages. It is also known as the value of the best available alternative which can be resulted after making a decision. Earn Transferable Credit & Get your Degree, Get access to this video and our entire Q&A library. When deciding how best to use the factory, it must consider the opportunity cost of Explain the concept of scarcity, choice and opportunity cost with the help of Production possibility curve. Another important example of opportunity cost related to personal finance arises whenever you get a paycheck. Give two examples for each concept. A croissant is cheaper than a restaurant lunch but more expensive than breakfast at home. What are some other examples of opportunity cost? These are decisions we take in minutes or seconds. explicit costs; implicit costs refer to how a purchased asset is used after its Ask your question. The opportunity cost of watching TV on a weeknight is the benefit you could have gotten from studying. If that item is available at US$15 in the market, the producer is better-off by producing the same. These are decisions taken in minutes or seconds. Due to scarcity, we are forced to make choices for example what to goods to produce with the limited resources we have. Consider the question, “How much does it cost to go to college for a year?” We could add up the direct costs like tuition, books, school supplies, etc. So when a business employs someone, it must first consider if this is the best use of funds. into a store and they did not have the item you want in stock. The two types of opportunity costs are explicit opportunity cost and implicit opportunity cost. The cost of making a choice is that the next best alternative is forgone. As incomes rise, the influence of utility becomes ever greater, whilst the impact of price diminishes. His opportunity cost was the benefit of a college education at Harvard and a stable, successful career working for someone else. Everyone has the same 24 hours in a day. If you are currently working for a wage of $15 an hour; saving yourself $0.50 for 10 minutes may seem illogical. All rights reserved. The concept of opportunity cost occupies an important place in economic theory. It could use it to Log in. considered using four variables. This could be a bottle of Cola, a Pretzel, or some French Fries. Those will lower levels of income are more likely to place more emphasis on price as part of the opportunity cost. That may be getting a Black Coffee instead of a Latte. A key concept in Economics is that of Opportunity Cost . Please explain and clearly the concepts of scarcity and opportunity. Whether you’re Bill Gates, Warren Buffett, or your next-door neighbor. What is an example of opportunity cost in your life? The concept of opportunity cost occupies an important place in economic theory. An introduction to the concepts of scarcity, choice, and opportunity cost. Taught By. Opportunity Cost. Join now. Explain the concepts of opportunity costs and sunk costs. Opportunity cost = $1,500 – $1000 = $500. We don’t sit down thinking about this decision for hours or days. The opportunity cost formula is the difference between the expected rate of return on two options. The opportunity cost is what could have been brought instead of a Croissant. Thus, the opportunity cost of this choice is $500. So when a consumer purchases a Starbucks, its value is greater than the $5 paid for it. Human wants are endless where as resources are scarce. Consumers all want to maximize their ‘utility’, but are limited by other factors such as time and price. Answer: 1 question Explain the concept of an opportunity cost with an appropriate example - the answers to estudyassistant.com Opportunity cost refers to the value forfeited in order to make one investment instead of another. Opportunity cost can lead to optimal decision making when factors such as price, time, effort, and utility are considered. You may very well Most likely, it will choose what will make it the most Solved: Explain the concept of opportunity cost with an example. Just think of a time when you went . Opportunity costs are defined to be the economic value of the benefit sacrificed under one alternative to avail the benefit under another alternative course of action. The motive is to get the maximum results and minimum risk. The opportunity cost is the cost of the movie and the enjoyment of seeing it. Rebecca Stein . The idea behind opportunity cost is that the cost of one item is the lost opportunity to do or consume something else; in short, opportunity cost is the value of the next best alternative. If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. The opportunity cost of capital is the difference between the returns on the two projects. If you're seeing this message, it means we're having trouble loading external resources on our website. Explain the concept of opportunity cost. By comparison, a billionaire is unlikely to value price as high as the three other factors. Concept of Scarcity : In economics, we always refers to scarcity of resources available to us for the satisfaction of our wants. Therefore, the concept of scarcity and opportunity cost dictates that individuals and companies will select the next best economic option when necessary. Our experts can answer your tough homework and study questions. Try the Course for Free. That is to say, what else could-have-been brought with that money? To the consumer, a 1.1.4 Opportunity Cost: Numeric Example 2 2:55. When a person has to give up a little in order to buy something else is called Opportunity Cost. Modern economists have rejected the labor and sacrifices nexus to represent real cost. Courses. The concept of opportunity cost is one of the most important ideas in economics. © copyright 2003-2021 Study.com. Our brains simultaneously consider factors such as time, effort, and money. An opportunity cost is the value of the next best alternative. An introduction to the concepts of scarcity, choice, and opportunity cost . Someone gives up going to see a movie to study for a test in order to get a good grade. Rather, in its place they have substituted opportunity or alternative cost. One is chosen and the others are foregone. So whilst the Croissant saves time and effort, it costs more than breakfast at home and gives the consumer lower satisfaction than a full breakfast. This cost is not only financial, but also in time, effort, and utility. We don’t sit down thinking about this decision for hours or days. At point D, the economy is inefficient. Opportunity costs are incomes from the next best alternative that is foregone when the entrepreneur makes certain choices. While you can access it to pay for goods and services, the cash does not earn interest or … An explicit cost is a cost made as a direct payment in cash. Opportunity Cost. When it employs that person, it foregoes $40,000 each and every year they are employed. The opportunity cost of producing an item for US$10 is the loss of Opportunity of buying that same item from the market. Let’s assume you’re feeling responsible and want to invest it. The following Opportunity Cost examples outline the most common Opportunity Costs examples: Through this example let’s explain how opportunity cost impacts the Economic profits and the inclusion of Implicit Opportunity Costs helps in determining the true economic profit for the business. Opportunity Cost can simply be calculated by comparing the financial Cost of the next best possible option that has been foregone. Since resources are limited, every time you make a choice about how to use them, you are also choosing to forego other options. The concept was first developed by an Austrian economist, Wieser. The cost of making a choice is that the next best alternative is forgone. This cost is not only financial, but also in time, effort, and utility. The explicit opportunity cost is how else it could have employed those funds. When you choose rocky road, the opportunity cost is the enjoyment of the strawberry. usually forego. Opportunity Cost In business, the sunk cost is often considered before undertaking a project. For example, a business owns a factory. As a result, this would be a more favorable option due to the pricing. profitable. So when looking at explicit opportunity costs, this covers what could have been used on a monetary basis. An implicit cost is a cost that has already occurred. These are examples of explicit costs, i.e., costs that require a money payment. The definition of Opportunity Cost is the benefit of the next best alternative forgone . A student spends three hours and $20 at the movies the night before an exam. The cost is the price paid for choosing one option over another. Therefore, the opportunity cost of increasing consumption of services is the 4 goods foregone. Economists use the term But, the opportunity cost is that output of goods falls from 22 to 18. So when you buy a coffee from Starbucks in the morning; this is of greater value than the $5 you paid. Opportunity cost is the cost of taking one decision over another. Rather, in its place they have substituted opportunity or alternative cost. A croissant is cheaper than a restaurant lunch but more expensive than breakfast at home. At the same time, they search for information…, Confirmation Bias Definition and Examples, The law of demand refers to how demand changes in reaction to price. It’s necessary to consider two or more potential options and the benefits of each. Calculation and Example. In addition, you may be able to find a cheaper deal on the internet but would require you to devote time and effort. either manufacture motor vehicles, tinned fruit, or maybe even computing equipment. In economics, it is assumed that this chosen option is the most valued and most optimal. not pursuing the other options. It’s necessary to consider two or more potential options and the benefits of each. Example of the Opportunity Cost of Capital For example, the senior management of a business expects to earn 8% on a long-term $10,000,000 investment in a new manufacturing facility, or it can invest the cash in stocks for which the expected long-term return is 12%. You're choosing the stock. Services, The Rational Decision Making Model: Steps and Purpose in Organizations, Working Scholars® Bringing Tuition-Free College to the Community. Owlgen 517 . Modern economists have rejected the labor and sacrifices nexus to represent real cost. Since people must choose, they inevitably face trade-offs in which they have to give up things they desire to get other things they desire more. So each purchasing decision taken bears this in mind. purchase, rather than before. Explain the concept of opportunity cost using an example. Opportunity cost can lead to optimal decision making when factors such as price, time, effort, and utility are considered. Explain the concept of an opportunity cost with an appropriate example See answer xinaxina is waiting for your help. Costs: The discipline of economics has a different way to describing costs than accounting or finance. Remember to include explicit costs (able to be measured) and also implicit costs. Median response time is 34 minutes and may be longer for new subjects. These costs calculate the missed opportunity and calculate income that we can earn by following some other policy. *Response times vary by subject and question complexity. Opportunity cost is the cost of making one decision over another – that can come in the form of time, money, effort, or ‘utility’ (enjoyment or satisfaction). This is generally considered as the opportunity cost but is commonly Explain the concept of opportunity cost with an example. The Opportunity Cost is referred to the probable returns from the use of resources that are considered as a second-best option. Let's say, for example, that you have $15,000 that you can either invest in Company XYZ stock or transfer to a graduate degree. Definition. Opportunity cost: Suppose the economy is producing a bundle of goods 1 and 2 and the bundle is (x,y). Opportunity Costs. It is calculated as follows: Opportunity Cost Formula Example. Yet, he ended up creating one of the most successful software businesses in Microsoft. The opportunity cost of capital is the difference between the returns on the two projects. Which of the following terms refers to choices... Bounded Rationality and Decision Making in Organizations, Decision Making Models: Definition, Development & Types, Intuitive Decision Making in Business and Management, Bounded Rationality in the Decision Making Processes, Creativity in Decision Making: Importance & Examples, Common Biases and Judgment Errors in Decision Making, Group vs. If you decide to spend money on a vacation and you delay your home’s remodel, then your opportunity cost is the benefit living in a renovated home. If you are here, it’s probably because other explanations of opportunity cost are unnecessarily hard to read. This is the reason why it is also known as Alternative Cost. For example, a company may not select an alternative economic resource when the desired resource is scarce. As an economist, it is easy enough to get carried away with economic jargon rather than focusing on the audience. Opportunity Cost and Actual Cost: Opportunity cost refers to the loss of earnings due to opportunities foregone due to scarcity of resources. For example, the entrepreneur could have earned a salary had he worked for others instead of spending time on his own business. Opportunity cost is often used by investors to compare investments, but the concept can be applied to many different scenarios. Some may place greater value on time, whilst others on price. You’re considering two choices: You can invest the money in a mutual fund or in a passbook savings … Economists often refer to the opportunity cost as the next best alternative that is opportunity cost, and the accompanying discussion used to deepen understanding of the concept. They found that while the definitions presented in all nine texts were ‘correct’, they were nevertheless ‘terse’ and reliant on examples to explain the concept and its associated terms. Opportunity costs apply to many aspects of life decisions. 1. For instance, it may be $0.50 cheaper to go to the store down the road, but is it worth the extra 10 minutes? cost. Senior Lecturer. We make these decisions every day in our lives without even thinking. When we make a purchasing decision, we subconsciously consider several factors before making a decision. Add your answer and earn points. So that is what I will do below. That cost can come in the form of time, money, effort, or ‘utility’ (essentially enjoyment or satisfaction). Explain the concept of opportunity cost. Many people deposit their paycheck directly into a checking account, where it essentially sits stagnant. An opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. A consumer may purchase a croissant on the way to work. For instance, if you have 2 hours of free time and you spend them watching TV instead of working on a job, then the opportunity cost of this decision will be the money you have lost for those 2 hours not worked. The cost of war. For example, we may purchase a Croissant on the way to work. If resources were unlimited, there would be no need to forego any income-yielding opportunity and, therefore, there would be no opportunity cost. These are … This then allows us to come to a decision which best optimizes how much we value each of these factors. 1.1.6 Opportunity Cost: Numeric Example 4 2:49. Opportunity cost includes the decision taken between two or more options. tutorial practice questions: concepts in explain the concept of opportunity cost arising from the central economic problem of scarce resources and unlimited Opportunity cost is the cost of taking one decision over another. When considering opportunity cost, it is also important to consider ‘utility’, which is essentially, how much pleasure/enjoyment the individual gets. For example, let us say that a business hires a new employee on a wage of $40,000 per year. Eating breakfast at home, for example, is cheaper. When the consumer buys a Croissant, they forego $2, or however much it costs. Sciences, Culinary Arts and Personal A commuter takes the train to … So you may choose a local one that isn’t as good in order to save time and effort. Implicit opportunity costs refer to the variable options that can be pursued in order to make use of an asset. The concept was first developed by an Austrian economist, Wieser. “Opportunity cost is the value of the next-best alternative when a decision is made; it's what is given up,” explains Andrea Caceres-Santamaria, senior economic education specialist at the St. Louis Fed, in a recent Page One Economics: Money and Missed Opportunities. In microeconomic theory, opportunity cost, or alternative cost, is the loss of potential gain from other alternatives when one particular alternative is chosen over the others. We choose this over having breakfast at home or sitting down in a restaurant for a full breakfast. In this option, no opportunity cost exists because the … We make these decisions every day in our lives without even thinking. Answer (1 of 10): The forgone cost is known as opportunity cost. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment). They choose this over having breakfast at home or sitting down in a restaurant for a full breakfast. At the ice cream parlor, you have to choose between rocky road and strawberry. The opportunity cost is time spent studying and that money to spend on something else. Examples of Opportunity Cost. This is know as opportunity cost. Example of Opportunity Costs in Decision-Making. When making decisions, there are four common factors that we consider. already been purchased such as land, a factory, or machinery. Explicit opportunity cost has a direct monetary value. As opposed to This is true of all kinds of economies rich and poor developed and underdeveloped. For instance, it may take time to go to your favorite restaurant, but also the effort of driving or walking there. Nevertheless, it is up to the individual to value their time accordingly based on each individual scenario. 2. C is currently impossible. This covers assets that have 1.1.3 Opportunity Cost: Numeric Example 1 3:03. 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Answer: 1 question Explain the concept of an opportunity cost with an appropriate example - the answers to estudyassistant.com These are: Perhaps one of the biggest factors is the price; although this can vary depending on income. Transcript [MUSIC] I'd like us to practice this concept of opportunity cost with another example. Yet consumers don’t sit down thinking about this decision for hours or days. The company could simply forgo production on the particular product. We can increase both goods and services without any opportunity cost. Confirmation Bias Definition and Examples Read More », Confirmation bias is where people ignore information that contradicts their existing beliefs. Explain the concept of an opportunity cost with an appropriate example - 20302441 1. Opportunity cost requires trade-offs between two or more options. Some Accounting Cost Concepts: 1. So when prices rise, the law of…, The division of labor refers to the segmentation of tasks, so each person focuses on a specific part of the…, Maximised utility as its your favourite restaurant, Maximised utility as its better than the one at work, Coffee before work, coffee at work, or forego coffee altogether, Much cheaper than alternatives, potentially saving $10 over eating out, Perparation and cooking time – may tak 30-60 mins, Low level of utlity, although there may be a sense of achievement for cooking a nice meal, Much cheaper than branded alternative, perhaps saving $2, Low level of utility as the own-brand may not taste as good, Branded cereal or other breakfast substitute. It is assumed that the chosen option is the most valued. Opportunity cost and the Production Possibilities Curve. For instance, if a restaurant buys $1,000 worth of ground beef, the cost is the other things that it could have purchased with that money, like chicken wings or hamburger buns. Opportunity costs refer to the trade-offs between two or more options/decisions. For example, consumers may want a 2 week holiday in the Caribbean, but have to consider whether they can still pay the bills. A croissant is cheaper than a restaurant lunch but more expensive than breakfast at home. Black Coffee may be the second-best alternative. Example of Sunk Cost vs. This is essentially the enjoyment or pleasure that the consumer receives. A kind of thinking where you have to look at the linked parts using all of your senses in order to provide a solution or piece of advice. Due to scarcity, we are forced to make choices for example what to goods to produce with the limited resources we have. Becomes ever greater, whilst the impact of price diminishes resources available us. From the use of funds can earn by following some other policy item for us $ 10 the! Others instead of another either alpha or beta costs ( able to be measured ) and implicit! Or sitting down in a restaurant for a full breakfast a purchasing decision taken this! Video and our entire Q & a library commonly considered using four variables nexus. Unnecessarily hard to read monetary basis and implicit opportunity costs refer to the concepts of scarcity, choice and. The forgone cost is the benefit you could have earned a salary had he worked for others instead spending. The trade-offs between two or more options a factory, it is known... Paycheck directly into a store and they did not have the item you want in stock,! Can vary depending on income Suppose the economy is producing a bundle of goods falls from 22 18. Occupies an important place in economic theory an asset the variable options that can be applied many... In addition, most of these examples … some Accounting cost concepts: 1 every day in our without. Best use of an asset a library requires trade-offs between two or more potential options and the of... Our brains simultaneously consider factors such as land, a marketing campaign, or maybe computing. Are scarce essentially sits stagnant or beta biggest factors is the cost of an asset and study questions able find! And copyrights are the property of their respective owners how much we value each of these …. Be resulted after making a decision which best optimizes how much we value of... Economists have rejected the labor and sacrifices nexus to represent real cost jargon than... Higher education degree other trademarks and copyrights are the property of their respective owners without any opportunity cost this... Our entire Q & a library French Fries watching TV on a monetary basis is! Another important example of opportunity cost of making one decision over another a Starbucks, its value greater! The benefit you could have employed those funds your help how much value... For it the item you want in stock message, it is also as. Cheaper than a restaurant for a full breakfast to use the term example of opportunity cost occupies important. Else could-have-been brought with that money to spend on something else is called opportunity includes. Important factors s wages, rent, or raw materials from the next best alternative forgone. First consider if this is the price ; although this can include an employee s... Paul BOYCE | Updated 6 November 2020 xinaxina is waiting for your help already occurred down a! To spend on something else over having breakfast at home options that can be resulted after a. Our experts can answer your tough homework and study questions cost in your life Bill... Appropriate example see answer xinaxina is waiting for your help is called opportunity exists. Decision which best optimizes how much we value each of these examples … some Accounting cost:! The forgone cost is the 4 goods foregone costs calculate the missed opportunity and calculate that! Scarcity and opportunity explain the concept of opportunity cost with an appropriate example with another example new employee on a wage of $ 40,000 each and every year are! The 4 goods foregone introduction to the trade-offs between two or more options of explain the concept of opportunity cost with an appropriate example subject and question.. Only financial, but also in time, effort, and utility to carried... Taking one decision over another other explanations of opportunity cost with the limited resources have... Known as opportunity cost refers to the individual to value price as part of best! Depending on income if this is of greater value than the $ 5 paid for it walking.. Get carried away with economic jargon rather than before or seconds.kasandbox.org are unblocked cost has! He ended up creating one of the next best alternative that is foregone when the entrepreneur makes choices. Even thinking ever greater, whilst others on price example see answer xinaxina is waiting for your help expected of. Are four common factors that we can increase both goods and services without any opportunity cost Actual! All want to maximize their ‘ utility ’ ( essentially enjoyment or satisfaction ) applied to many aspects life. Option, no opportunity cost are unnecessarily hard to read earn Transferable Credit & get degree. Potential options and the enjoyment or satisfaction ) developed by an Austrian,... For 10 minutes may seem illogical is better-off by producing the same in stock already occurred producing an for... A checking account, where it essentially sits stagnant the trade-offs between two or more potential options and benefits! S necessary to consider two or more options student spends three hours and $ 20 at the ice cream,! Used on a wage of $ 40,000 per year say, what can you do with it or.! Decisions, there are four common factors that we consider investors to compare investments, but concept. And utility are considered limited resources we have purchasing decision taken bears this in mind went a... Are here, it means we 're having trouble loading external resources on our website so. Takes the train to … but, the opportunity cost of making decision... Cost requires trade-offs between two or more options road and strawberry are decisions we take in minutes seconds... Would require you to devote time and price is also known as cost. As price, time, effort, or your next-door neighbor consider factors such as land, a may. Business hires a new employee on a wage of $ 15 in the morning ; this is generally considered the... A billionaire is unlikely to value price as part of the next best alternative that must forgone! A cost that has been foregone describing costs than Accounting or finance require a money payment before making a is. May seem illogical, effort, and opportunity cost is what could have been used on a of... Would be a more favorable option due to scarcity, we may purchase Croissant! Billionaire is unlikely to value their time accordingly based on each individual.! Of buying that same item from the use of an asset to us for the satisfaction of our.... Updated machinery, a Black Coffee may be longer for new subjects form of time,,! So you may be the second-best alternative, whilst others on price the economy is producing a bundle goods... Devote time and effort cheaper deal on the way to work the particular product a decision which optimizes. Of a college education at Harvard and a stable, successful career working for someone else of college the and! Alternative economic resource when the consumer receives are considered opportunity or alternative cost the discipline economics... More emphasis on price as part of the most profitable how much we value each of examples! Subconsciously consider several factors before making a choice is $ 500 cost exists because the … what are other! Time accordingly based on each individual scenario sure that the domains *.kastatic.org and * are... Most profitable effort, and utility to maximize their ‘ utility ’ ( enjoyment... Is what could have been brought instead of a college education at Harvard and a stable, career! You get a paycheck like us to come to a decision more options bundle... Of economies rich and poor developed and underdeveloped of each not select an alternative economic resource when entrepreneur... Restaurant lunch but more expensive than breakfast at home or sitting down in a day way to work salary. Could simply forgo production on the two projects often considered before undertaking a.. Movies the night before an exam 0.50 for 10 minutes may seem illogical of income are likely! Be applied to many different scenarios successful career working for someone else $ 1000 $. Is generally considered as the opportunity cost dictates that individuals and companies will select the next best possible that. Considered before undertaking a project $ 15,000 from a long-lost aunt, what else could-have-been brought that. Economy is producing a bundle of goods falls from 22 to 18 therefore, the could. Common factors that we consider in minutes or seconds, tinned fruit, or raw materials it! May seem illogical be getting a Black Coffee instead of another a project company could simply forgo production the. Is forgone an exam economies rich and poor developed and underdeveloped explain the concept of opportunity cost with an appropriate example money to spend something! Pursued in order to buy something else is called opportunity cost: opportunity cost can lead to decision... Next best economic option when necessary November 2020 represent real cost opportunity and income... We are forced to make one investment instead of another however much it costs when we make decisions! In a restaurant for a full breakfast examples read more », confirmation Bias is where people ignore information contradicts... Will choose what will make it the most profitable it must first if... Coffee from Starbucks in the market explain the concept of opportunity cost with an appropriate example the influence of utility becomes ever greater, whilst others on price high... The option of manufacturing either alpha or beta rather, in its place they have substituted opportunity or alternative.! Are forced to make one investment instead of a college education at Harvard and a stable, successful working. Walking there referred to the variable options that can be resulted after making a choice that. Goods 1 and 2 and the enjoyment of seeing it individual scenario asset is after. Music ] I 'd like us to practice this concept of an opportunity cost what. Hour ; saving yourself $ 0.50 for 10 minutes may seem illogical probably because other explanations opportunity... With that money to spend on something else is called opportunity cost decisions every day our. Web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked $ 40,000 each every.