Reply To: Opportunity Cost
Vanshika Gupta
Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over another. While financial reports do not show opportunity cost, business owners can use it to make educated decisions when they have multiple options before them
The formula for calculating an opportunity cost is simply the difference between the expected returns of each option.
The most basic definition of opportunity cost is the price of the next best thing you could have done had you not made your first choice. Opportunity costs include both explicit and implicit costs.