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    Thread: what is opportunity cost?

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      Default what is opportunity cost?

      what is opportunity cost and how could it be determined?


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      opportunity cost is the real cost of a product or service. this does not mean the real value as per the price, but the real value in terms of the alternative forgone. so it is also called the alternative cost.

      since human needs are numerous, the satisfaction of one need means the giving up of another need that could as well have been satisfied with the available little resources.

      so opportunity cost is the benefit a person misses because he has gone for another need. for example, if a man has $200 and has need for two products, A and B. the price of A is $105 while the price of B is $160. the man could therefore not settle the two needs since he has limited resources. he would now need to choose one of the items over the other. if he chooses item A, then he pays $105 being the price of the product. the $105 is, however, not the real cost of the product. the real cost of the product is item B which was left unpurchased.
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      Default What is opportunity cost?

      Quote Originally Posted by remmy View Post
      what is opportunity cost and how could it be determined?
      Basic concepts of economics have to do with Wants, Resources, Scarcity, choice, Scale of preference and the opportunity cost.
      These characterize the style of individuals, firms and organization. When all these come up there is bound to be the need to make a choice which will depend on the Scale of preference. In this case there will be a need to forego or sacrifice some alternatives.
      The sacrificed alternatives in economics are referred to as the opportunity cost. This underlines the basic economics problems of scarcity and choice. The concept reveals human activities involving economic decision.


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      Opportunity costs arise because economic resources are limited to force people to make choices in meeting their needs, which is certainly based on a priority scale of need. The choices made will result in sacrifices on other options and the incidence of opportunity costs. In his calculations, the opportunity cost is not necessarily related to money. It can also be time, fun, future profits, and other factors. In making this decision the opportunity cost depends on the goals and situation experienced by the individual. as well as two ways opportunity in forex trading, estimating profit opportunities when up and down.
      Forex trading offers profit opportunities in every condition that occurs in the market. Armed with technical and fundamental analytical skills you can take advantage of market fluctuations, either when prices rise or fall, or two ways opportunity.


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      what is opportunity cost?
      Opportunity cost is a term from economics. It rises when you choose one things and leave the best alternatives. Let me clear it with an example of Forex trading. Suppose, you have $100 capital account. You can only open 5 trades with this amount as you are using 1:50 leverage. Now as per your analysis you see that Gold will go down for sure as well as EUR/USD, GBP/USD, Oil, USD/JPY and GBP/JPY. Now you have to choose only 5 pairs from them and you choose EUR/USD, GBP/USD, Oil, USD/JPY and GBP/JPY. Here Gold is the opportunity cost. You could manage good profit through Gold trading but you have to leave that due to limitation. This is called opportunity cost. The best alternative that you leave for choosing the another one. As like choosing Forex trading instead of share market. You could manage profit from both sources but you have to choose only one. This is opportunity cost. I think it's clear to you.
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      Opportunity cost is decision based on what should be ruled out as a result of a decision. Any decision involving choice between two or more has an opportunity cost. This will depend on the economic system adopted by a society. Suppose that in trading, you have open positions on GBP/USD and EUR/USD with the same position. According to your analysis the opportunity to earn more profit on EUR/USD is greater when compared to GBP/USD then you will charge a larger lot size on EUR/USD to get profit. This means you have an opportunity cost of getting more from EUR/USD and sacrificing GBP/USD to get your needs.
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      Opportunity Cost : it is the choosing between more alternatives while the decision making stage so it is also called alternative cost and the cost always be in the choice because in decision making stage we always try to choose the best alternative so when we choose it from the other alternatives we always lose the advantages which we have it in the other alternatives so it always called as alternative cost and it doesn't mean the monetary loses only but there are other real costs for it as lost time and other benefits beside the pleasure .

      and in production we have two types of opportunity cost :
      1- Explicit costs : it is the direct costs which the producers pay it in monetary payments as the electricity power invoice .
      2- implicit costs : it is the indirect costs which producers bear it and it always not be in a monetary payments but it always related to the company resources which they have to use it correctly for producing an output .


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      Opportunity cost is a term that is used economically to express the loss of your choice of alternatives at the expense of other alternatives.
      Which means you lack the advantages of one of the alternatives because you chose another alternative
      This term is used when you are forced to choose between several unequal alternatives accordingly. When choosing an alternative 1, you lose the advantages that you would get if you chose Alternative 2.
      This term was formulated by an Austrian economist in one of his writings on the theory of social economy
      In the end is one of the theories formulated by one of the scientists in economics so as to benefit other scholars and those interested in economics and finance


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      Opportunity cost is a popular language on economics, it's the relationship between scarcity and choice.
      Choice is the act of given up a Good for the sake of getting another, so in this case such good is scarce

      Opportunity cost simply can be defined as an opportunity or profit a business could get and they loose it while choosing between an investment or business deal or product over another.

      There are some situations where we will have to give up on something in other to get another

      for example we wanna buy 10 oranges and we only have to go for five oranges because money is scarce in our hand, the five oranges we gave you is the opportunity cost


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      Opportunity cost is an economical term which may be defined as the best alternative we sacrifice for choosing over one. It also called the alternative cost. It is the basic concept of economics which explains the relationship between scarcity & choice. There are many opportunities we can choose but we have to choose only one. The second best alternative which we sacrifice for choosing the first one is called the opportunity cost.
      For example: I need a personal ride to go office to home & home to office. I have two options 1. A Car, 2. A bike. But I have the money to buy either the bike or the car. I choose to buy bike cause it is less expensive & I can spend rest of the money for my household works. That's why I have to sacrifice the option to buy car. Here buying car is the opportunity cost for buying the bike.


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