The opportunity cost of an item is what you give up to get that item.
What is Opportunity Cost?
- Opportunity cost is the comparison of one economic choice to the next best choice.
- These comparisons often arise in finance and economics when trying to decide between investment options.
- The opportunity cost attempts to quantify the impact of choosing one investment over another.
- Investors are always faced with options about how to invest their money to receive the highest or safest return.
- The investor’s opportunity cost represents the cost of a foregone alternative.
- If you choose one alternative over another, then the cost of choosing that alternative becomes your opportunity cost.
- A simple way to view opportunity costs is as a trade-off. Trade-offs take place in any decision that requires forgoing one option for another.
- Opportunity Cost = Return on option not chosen - Return on option chosen
To learn more about opportunity cost, refer to: https://brainly.com/question/21844678
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