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What does the opportunity cost? how does it affect decision making?
Opportunity cost is one of the cornerstones of managerial economics and the decision making. First, provide your own explanation of difference between opportunity and accounting cost, and accounting and economic profits. Then, please provide an example from your experience where opportunity cost was ignored and only the accounting (i.e. monetary) cost was considered.
How did this affect the decision made? What were the consequences?
Which statement is true of an opportunity cost?
A. It is the least desirable alternative given up as the result of a decision.B. When making a decision, every trade-off is an opportunity cost.C. Every decision has at least two opportunity costs.D. Every ordinary decision we make involves an opportunity cost.
