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what is the formula of opportunity cost. The opportunity cost will be. 1200 1000 12 Opportunity Cost in Production There will the opportunity cost in the production process every time we allocate our resources to produce any specific product.
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However the following is a formula that some businesses use to calculate opportunity costs when possible. It is a hypothetical assumption and often measured to get the value of the actual decision made. 1200 1000 12 Opportunity Cost in Production There will the opportunity cost in the production process every time we allocate our resources to produce any specific product.
What I sacrifice what I gain opportunity cost 20 freelancing 8 barista 25 per hour So for every 100 I made at the coffee shop I could be making 250 while freelancing.
If we think about the cost of opportunity like this then the equation is very easy to understand and its straightforward. However the following is a formula that some businesses use to calculate opportunity costs when possible. For example when you miss out on a 50 profit in favor of a 75 profit your opportunity cost is simply 50. The difference is the opportunity costs.
