Economic Term Opportunity Cost

Economic Term Opportunity Cost-53
But let's make sure we understand opportunity cost.

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When referring to opportunity costs, investors often see it as the benefit you would have received by taking an alternative financial action.

The difference in return between a chosen investment and your forgone alternative is essentially your opportunity cost.

So this right over here, you can also view it as the marginal cost.

In the context of this video, our costs are in terms of the thing that I'm giving up, the opportunity that I'm giving up.

But what's the opportunity cost-- let's say, we're tired of eating meat.

We're sitting in scenario E, and we want to become vegetarians altogether.

It serves as a measure of an economic choice as compared to the next best one.

For example, there is an opportunity cost of choosing to finance a company with debt over issuing stock.

And we can do it at different points of this curve, and I actually encourage you to do.

Based on the data that we have in this table that we constructed in the last video and maybe this curve, think about what the opportunity cost is in the different scenarios.


Comments Economic Term Opportunity Cost

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