What Is opportunity cost and how is it different from accoun

What Is opportunity cost, and how is it different from accounting cost? Give an example of how the Principle of Opportunity Cost applies to your life. Think of a recent decision you made. It could be a decision as simple as whether to eat out or cook at homo. Or, it could be a decision to quit your Job and go back to school. What alternatives did you consider? How did you arrive at your final decision? Did you Implicitly weigh marginal cost and marginal benefit? How does the concept of opportunity cost apply to production possibilities curve (PPC) analysis? How can we use PPC analysis to examine the opportunity cost of what we do?

Solution

Opportunity Cost : It reffered to as economic cost is the value of best alternative that was not choosen in order to purpose the correct endeavour that is what could have accomplished with the resources expended in the undertaking.It represents opportunites forgone.

Accounting Cost : In accounting costs are the monetary value of expenditures for supplies, labor , products eqipment and other items purchased for use by a business or other accounting entity. It is the amount denoted on invoices as the price and recorded in book keeping records as an expense or asset cost basis.

Example of principle of opportunity cost :

Some one gives up going to see a movie to study for a test inorder to get a good grade. The opportunity cost is the cost of the movie and the enjoyment of seeing it.

marginal cost and marginal benefit :

Choosing one of different priced models of computer. Marginal Cost is price difference, Marginal Benefit is how much you like additional features.

Opportunity cost apply to production possibility curve analysis :

Production Possibilty curves is a hypothetical representation of amount of two different goods that can be obtained by shifting resources from the production of one to the production of another one.

Opportunity Cost demonstrates the important economic concept.which is the cost of anything in terms of what has to be given up.This is the general concept of cost of economics.