What is the formula to calculate opportunity cost?

= Return
You can determine the opportunity cost of choosing one investment option over another by using the following formula: Opportunity Cost = Return on Most Profitable Investment Choice – Return on Investment Chosen to Pursue.

What is an opportunity cost example?

The opportunity cost is time spent studying and that money to spend on something else. 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). A commuter takes the train to work instead of driving.

How do you calculate opportunity cost chart?

How do you find opportunity cost between two points?

How do you calculate opportunity cost of capital?

The best way to calculate the opportunity cost of capital is to compare the return on investment on two different projects. Review the calculation for ROI (return on investment), which is ROI = (Current Price of the Investment – Cost of the Investment) / Cost of the Investment.

What is opportunity cost example in business?

Most business owners do consider opportunity costs whenever they make a decision about which of two possible actions to take. … For example, a landscaping firm may be bidding on two jobs each of which will use half of its equipment during a particular period of time.

What is opportunity cost in accounting?

Opportunity cost is the profit lost when one alternative is selected over another. … If you could have spent the money on a different investment that would have generated a return of 7%, then the 2% difference between the two alternatives is the foregone opportunity cost of this decision.

How do you find opportunity cost from a table in economics?

Which of the following is the best example of opportunity cost?

Examples of Opportunity Cost. Someone gives up going to see a movie to study for a test in order to get a good grade. The opportunity cost is the cost of the movie and the enjoyment of seeing it. At the ice cream parlor, you have to choose between rocky road and strawberry.

Which scenario is the best example of opportunity cost?

The correct answer is a. A computer company produces fewer laptops to meet tablet demand. Opportunity cost defines the benefit obtained by having a commodity after forgoing some other commodity. In the problem statement, the computer company incurs an opportunity cost of laptops for tablets.