Opportunity Costs are
an important component of Economic studies and forms a core domain of
Economics. Many people define Oppurtunity costs in many ways and there are
various approaches to analysing opportunity costs.
For practical purposes what is Opportunity Costs ? They are basically of two kinds..costs of
missed opportunities and also the costs of Alertnate choices as the case might
be.
We see Opportunity Costs in the case of missed Business
opportunities and Opportunity costs of a
different kind in the use of resources for alternate production in the areas of
Manufacturing.
Let us take the case of Oppurtunity costs in the form of
missed Oppurtunity with regards to Business Economics.
QUANTITY DEMAND PRICE REVENUE
TEA 7 8 7 49
COFFEE
6 5 8 48
Note the context of missed Opportunities;
Demand for tea was 8 but quantity produced was only 7 and
there is loss of opportunity of one tea
Also note that one extra coffee was made with one coffee as
wasted opportunity.
Loss of income due to missed opportunities id to the tune
of 7
+ 8 which is 15
The economic Revenue so to say is less than the Market
Revenue;
TOTAL MARKET REVENUE IS 49+48 which is 97
Loss of opportunity is 15
SO ECONOMIC REVENUE IS 97 – 15 WHICH IS 82
ECONOMIC REVENUE = MARKET REVENUE When TEA PRODUCED IS
8 AND COFFEE IS 5
