This is easy to see while looking at the graph, but opportunity cost can also be calculated simply by dividing the cost of what is given up by what is gained. The opportunity cost is time spent studying and that money to spend on something else. You can use this money to buy a KFC Mighty Zinger or an Accounting textbook for your upcoming quiz. So, what is opportunity cost? Thus the opportunity cost of the computer is the income expected from the Xerox machine. In business circles, the opportunity cost is known as economic cost and its existence is limited to the production process. The opportunity cost to enjoy a KFC Mighty Zinger, therefore, is an Accounting textbook. examples of opportunity costs One way to demonstrate opportunity cost lies in the employment of investment capital. A simple example of opportunity cost is to let us suppose that a person is having Rs. What Does Opportunity Cost Mean? Here are a few examples. Opportunity Cost Examples. Opportunity Cost is the benefit that an individual is losing out by choosing one option instead of another option. Explicit opportunity cost has a direct monetary value. Before you sprint towards the opportunity cost examples provided in this article, it is essential that you understand the concept first. A student spends three hours and $20 at the movies the night before an exam. Example of Sunk Cost vs. What It Means for Individual Investors . For example, a private investor purchases $10, 000 in a certain security, such as shares in a corporation, and after one year the investment has appreciated in value to $10, 500. But there is an important Opportunity Cost specifically when choosing between a traditional ecommerce model and that of dropshipping. Let's say you have only $100 to spend and you have two choices: you can eat at a nice restaurant or you can buy seven music albums instead. The two types of opportunity costs are explicit opportunity cost and implicit opportunity cost. For example, a food company may spend $10,000 on a market research study to assess whether repackaging their orange juice will make a difference in brand recognition and awareness. Opportunity Cost and practical applications. Let’s suppose you have $10. If you choose to buy a burger, you won’t be able to afford the Accounting textbook. Opportunity Cost Example For Ecommerce Merchants We have already given three examples of Opportunity Costs for ecommerce merchants. Here are some interesting opportunity cost examples that would definitely strengthen your grip on this simple yet rational economic concept! Opportunity Cost Examples. In this example, the opportunity costs are continued interest gains on bond "A" and the initial loss of $10,000 on bond "B" while hoping to recover it and increase your profits in the future. Definition: An opportunity cost is the economic concept of potential benefits that a company gives up by taking an alternative action.In other words, this is the potential benefit you could have received if you had taken action A instead of action B. What are some other examples of opportunity cost? Green Metro, Inc. is a company interested in public transportation projects in developing countries. Opportunity Cost: Examples. Opportunity Cost In business, the sunk cost is often considered before undertaking a project. Example. For instance, if a restaurant buys $1,000 worth of ground beef, the cost is the other things that it could have purchased with that money, like chicken wings or hamburger buns. Therefore, in calculating net initial investment outlay, analysts need to ignore the sunk costs but include opportunity costs in their analysis.