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Opportunity cost, as such, is an economic concept in economic theory which is used to maximise value through better decision-making. In accounting, collecting, processing, and reporting information on activities and events that occur within an organization is referred to as the accounting cycle.
Comparative advantage in an economic model is the advantage over others in producing a particular good. A good can be produced at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. [1] Comparative advantage describes the economic reality of the work gains from trade for individuals, firms ...
An example that combines features above is a country that specializes in the production of high-tech knowledge products, as developed countries do, and trades with developing nations for goods produced in factories where labour is relatively cheap and plentiful, resulting in different in opportunity costs of production.
The opportunity cost of any activity is the value of the next-best alternative thing one may have done instead. Opportunity cost depends only on the value of the next-best alternative. It does not matter whether one has five alternatives or 5,000. Opportunity costs can tell when not to do something as well as when to do something. For example ...
Crime opportunity theory suggests that offenders make rational choices and thus choose targets that offer a high reward with little effort and risk. The occurrence of a crime depends on two things: the presence of at least one motivated offender who is ready and willing to engage in a crime, and the conditions of the environment in which that offender is situated, to wit, opportunities for crime.
The slope of the production–possibility frontier (PPF) at any given point is called the marginal rate of transformation ( MRT ). The slope defines the rate at which production of one good can be redirected (by reallocation of productive resources) into production of the other. It is also called the (marginal) "opportunity cost" of a commodity ...
For example, for a person going to a basketball game, their opportunity cost is the loss of the alternative of watching a particular television program at home. If the basketball game occurs during her or his working hours, then the opportunity cost would be several hours of lost work, as they would need to take time off work.
In macroeconomics, the guns versus butter model is an example of a simple production–possibility frontier. It demonstrates the relationship between a nation's investment in defense and civilian goods. The "guns or butter" model is used generally as a simplification of national spending as a part of GDP. This may be seen as an analogy for ...