What is opportunity cost and how to seize an opportunity

The opportunity cost is equal, and seizing the opportunity requires quick attention.

Opportunity cost is the amount of money that can be earned by luck.

Opportunity cost refers to the maximum value of giving up something in order to get something; It can also be understood that when faced with a multi-option decision, the most valuable option to be discarded is the opportunity cost of the decision; It also refers to the highest profit that manufacturers can obtain by investing the same factors of production in other industries.

The project with the highest benefit among the abandoned opportunities is the opportunity cost, that is, the opportunity cost is not the sum of the benefits of the abandoned project. For example, if a farmer can only choose one of the pig raising, chicken raising and cattle raising, if the income relationship between the three is cattle raising, pig raising, and chicken raising, then the opportunity cost of raising pigs and chickens is cattle raising, and the opportunity cost of pig raising is only cattle raising.

Scope of application of the opportunity cost method:

To measure the value of a resource at opportunity cost, the resource must have both of the following attributes:

1. Resources must have multiple uses, and if the resources have only one purpose and there is no storage regulation in time (such as the water from the run-of-the-river power station, there is no "opportunity" to talk about.

2. Resources must be scarce, and if there are enough resources to ensure that every use can be fully satisfied, there is no need to apply opportunity costs.

Opportunity cost (5).

Opportunity cost refers to the opportunity for an enterprise to give up another business activity in order to engage in another business activity, or another type of income when using a certain resource to obtain a certain income. The income from another business activity or another income is the opportunity cost of the business activity being engaged. Enterprises should choose business projects whose actual benefits outweigh the opportunity costs, so that limited resources can be optimally allocated.

"Opportunity cost" is Western economics.

In terms of conceptuality, the definition of opportunity cost in some books is not complicated, and the most commonly used concept is to define it as "producers use the same factors of production."

the highest yield that can be obtained in other productive uses". [2]

Opportunity cost for a commercial company can be when a certain amount of time or resources are used to produce a commodity, and the lost opportunity to use these resources to produce other best substitutes is the opportunity cost.

In life, there are some opportunity costs that can be measured in monetary terms. For example, when a farmer gets more land, he can't choose to raise chickens if he chooses to raise pigs, and the opportunity cost of raising pigs is to give up the benefits of raising chickens. But there are some opportunity costs that are often not measurable in monetary terms, such as choosing between reading a book in the library or enjoying a TV series.

There is a useful concept in economics called "opportunity cost". Many people say that I am not engaged in economics, so what is the use of knowing him?

Opportunity cost refers to the cost of doing a thing, the cost of a decision, or the cost of making a choice.

When we make choices or decisions, we use resources, so cost refers to the value of the various resources used. Under competitive conditions, opportunity cost is the current maximum market value of the resources used.

Opportunity cost is related to the scarcity of resources. Because resources are scarce, there is a cost to any choice we make. Any choice comes at a price.

Opportunity cost is defined as the cost of a choice or decision – the value of the best use that must be given up when a resource is used for a certain purpose.

Take a popular example: a friend gave you a movie ticket worth 60 yuan, if you decide to take the movie ticket to watch a movie, then the cost you pay is the cost of time and the cost of the movie ticket, even if the ticket is given to you by someone else, but it is still worth 60 yuan, and you can have 60 yuan if you sell it. Therefore, when you choose to take a movie ticket to watch a movie, at this time you give up the opportunity cost, which is your time cost + 60 yuan ticket price.

One more extension. If a friend gives a real-name movie ticket for 60 yuan, how to calculate the opportunity cost. There are many cases in this life, such as mileage redemption tickets, which can only be used by the redeemer.

In this case, you can't sell because of the restrictions on what you can use, so the opportunity cost is only the cost of your time.

<> What is Opportunity Cost?

Opportunity cost is the value of a suboptimal choice that is abandoned after the optimal choice is made when faced with multiple choices.

For example: you have 100,000 yuan, and now Zaokai is faced with a choice:

1. Do business, annual income 8% = 8000

2. Deposit bank, the annualized interest rate is 2%=2000

In the end, you choose to do business, then the opportunity cost of your business is interest income, which is 100,000 * 2% = 2,000 yuan.

On a beautiful Sunday afternoon, you can go to the cave to study investment courses, or you can go shopping for entertainment. If you choose to study, then the opportunity cost you pay is an afternoon of relaxation and happiness.

There are several prerequisites for opportunity cost to exist.

1. Resources have multiple uses, at least 2 uses.

2. Resources are scarce, including money, time and everything of value.

3. The benefits are comparable, the benefits brought by different uses and different choices can be compared, and 4. The resources can flow freely.

Application of opportunity cost.

Opportunity cost is an important concept in economic principles. The company gives up the opportunity to do business B in order to engage in business activity A, or another type of income when it uses a certain resource to obtain a certain income.

Through the analysis of opportunity cost, the investment effect of different investment directions of the same resource can be compared to maximize the benefit of resource utilization. Companies can choose the right business as much as possible, based on the fact that the actual benefits must outweigh the opportunity costs.

In addition to the field of economics, it is the same in life, life is a process of constant choice and disobedience, there will be a cost if there is a choice, and if you choose this, you will lose that.