Opportunity cost is equal to implicit costs plus explicit costs. II. Opportunity cost only measures direct monetary costs. Opportunity cost accounts for alternative uses of resources such as time and money.
What is true opportunity cost?
When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you cannot spend the money on something else.
What is an opportunity cost statement?
Simply stated, an opportunity cost is the cost of a missed opportunity. It is the opposite of the benefit that would have been gained had an action, not taken, been taken—the missed opportunity. This is a concept used in economics.
What is implicit opportunity cost?
Implicit costs are a type of opportunity cost, which is the benefit that a company misses out on by choosing one option or alternative versus another. A company may choose to include implicit costs as the cost of doing business since they represent possible sources of income.
Which is the following statement about opportunity cost is true?
Which of the following statements about opportunity cost is true? I. Opportunity cost is equal to implicit costs plus explicit costs. II. Opportunity cost only measures direct monetary costs. III. Opportunity cost accounts for alternative uses of resou | Study.com Which of the following statements about opportunity cost is true? I.
How to calculate the opportunity cost of an action?
To calculate accurately the opportunity cost of an action we need to first identify the next best alternative to that action. a) III only. b) I and III only. c) II only. d) None of the statements is true. Nice work! You just studied 16 terms! Now up your study game with Learn mode.
Why is it important to know about opportunity cost?
If you had to choose between purchasing or selling a stock, you could make immediate gains from the sale, but you lose the gains the investment could bring you in the future. Learn more about opportunity cost and how you can use the concept to help you make investment decisions.
Which is an alternative definition of opportunity cost?
Alternative definition: Opportunity cost is the loss you take to make a gain, or the loss of one gain for another gain.
