Opportunity Cost Examples Here are a few examples: Let's say you have only $100 to spend and you have two choices: you can eat at a nice restaurant or buy seven music albums instead. We choose this over having breakfast at home or sitting down in a restaurant for a full breakfast. You could have used that time to do something else you value—visiting a friend or reading a book, perhaps. For example, let's assume you have $15,000 that you could either invest in Company XYZ stock or put toward a graduate degree. “Opportunity cost is the cost of taking one decision over another. The concept is useful simply as a reminder to examine all reasonable alternatives before making a decision. Opportunity cost is the profit lost when one alternative is selected over another. You choose the stock. That can come in the form of time, money, effort, or ‘utility’.” For example, we may purchase a Croissant on the way to work. For example, you have $1,000,000 and choose to invest it in a product line that will generate a return of 5%. The opportunity cost is time spent studying and that money to spend on something else. The opportunity cost is the movie that has been forgone. Examples of Opportunity Cost. They could also include the cost of the opportunity of missing 4-years of salary in their calculations.
Some examples of opportunity costs are: giving up your favorite movie to study (in order to get good grades). For example, you don’t have to spend money to go for a hike or watch a sunset, but there is an opportunity cost there too. This $2 says, for every dollar, I earn working for one hour as a bartender, I sacrifice $2 working the same hour as a mechanic. So, what is opportunity cost? Going back to our example, if you chose to spend an hour working as a bartender instead of a mechanic, then you are actually giving up ($50 mechanic / $25 bartender) = $2 of opportunity cost. Before you sprint towards the opportunity cost examples provided in this article, it is essential that you understand the concept first. What are some other examples of opportunity cost? Another example where student considers the cost of a 4-year university education by calculating total hostel, tuition and other expenses for the period. A student spends three hours and $20 at the movies the night before an exam. Here are some interesting opportunity cost examples that would definitely strengthen your grip on this simple yet rational economic concept! Opportunity cost refers to the value forgone in order to make one particular investment instead of another.
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