Opportunity Cost 2019-05-28 08:00:00

Opportunity Cost

Opportunity cost represents the benefits an individual or business forgoes when it makes one decision in place of another. Opportunity costs are oftentimes unseen in that the consequences of choosing not to pursue one strategy in place of another, but individuals and firms can benefit greatly from working to quantify the cost of not pursuing a particular option.

Opportunity cost can be calculated by subtracting the expected return of a chosen option from the expected return on a foregone option.

 


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