what is the difference between economic choice and opportunity cost?
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Scarcity — The condition that exists when there are not enough resources to satisfy all the wants of individuals or society. Choices — The decisions individuals and society make about the use of scarce resources. Opportunity Costs — The next highest valued alternative that is given up when a choice is made.
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The formula for calculating an opportunity cost is simply the difference between the expected returns of each option.
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Ideas are solutions to problems and are important providing creative spark for your business. Opportunities, on the other hand, are something (ideas, circumstances, situation) that can lead to a desirable and viable business. They may or may not originate from an idea. Opportunities have value.
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So the difference between the two is between money that has actually been spent and money that would have been earned. ... And if you earn money from those stocks, the opportunity cost of the choice to invest is the money you would have earned if you'd invested in stocks from a different company.
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Economic profit is a firm's total revenue minus its total costs, including variable, fixed and opportunity costs. ... Economic profit subtracts fixed costs, whereas producer surplus does not. We will explore fixed costs in depth soon.
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Terms in this set (69) Opportunity cost is what you give up by making a choice. Examples of personal opportunity costs are time, knowledge, skills, health. Examples of financial opportunity costs are how much spend, save, invest.
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what is the difference between zero accounting profit and zero economic profit? zero accounting profit take opportunity costs into account, while zero economic profit does not. ... if a firm has zero economic profits, they have will positive accounting profits.
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2 Answers. Opportunity cost is simply the value not obtained of the highest value alternative. ... Opportunity profit would just equate to opportunity cost because you are not doing whatever the opportunity is. (Also, I'm not the down voter).
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Simply put, the opportunity cost is what you must forgo in order to get something. The benefit or value that was given up can refer to decisions in your personal life, in a company, in the economy, in the environment, or on a governmental level.
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The key difference between market price and equilibrium price is that market price is the economic price for which a good or service is offered in the marketplace whereas equilibrium price is the price where demand and supply for a good or service are equal.
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While a trade-off denotes the option we give up, to obtain what we want. ... On the other hand, the opportunity cost is the cost of the second best alternative given up to make a choice.
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What is the difference between economic and financial investments? Financial investments include all purchases undertaken with the expectation of financial gain; economic investments include only purchases of new capital goods. A specific amount of money is more valuable to a person the sooner it is received.
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Opportunity cost can be zero in the case where there is no alternative available, say, for example, for a student there is no alternative for studying, here the student has to study either by hooks or by crooks. Therefore, in such cases where their are no alternatives available, theopportunity cost is zero.
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Opportunity Cost of Capital. The difference in return between an investment one makes and another that one chose not to make. This may occur in securities trading or in other decisions. ... One way of conceptualizing opportunity cost is as the amount of money one could have made by making a different investment decision.
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Economic opportunity means any purchase, sale, lease, contract, option, or other transaction or arrangement involving property or services wherein a consultant may gain an economic benefit.
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Simply put, VE is designed to find the best value, not the best price. Unlike cost-cutting, value engineering focuses on cost optimization. It might actually cost you more in an upfront investment in order to save money on production or optimization costs in the long term.
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An economic good is a good or service that has a benefit (utility) to society. Also, economic goods have a degree of scarcity and therefore an opportunity cost. This is in contrast to a free good (like air, sea, water) where there is no opportunity cost – but abundance.