What is the opportunity cost

Welcome to a Professor, today we are going to talk about the concept of opportunity cost.

Companies have to make decisions that have consequences for profit level. If we do not make the right decision, or we do not make the optimal decision, this can have the consequence that we have less benefits than we could have had.

The opportunity cost It would be this difference between what we have achieved (the benefit that we have obtained), less the benefit that we could have obtained. With which, if the company has opted for the optimal decision, we will have a zero or negative opportunity cost. However, if we have not made the most appropriate decision, the opportunity cost will be positive for which the company will have lost money.

In a competitive world in which all companies intend to position themselves in the market and sell their products in a way that encompasses more people that product, have a larger market, and have the greater number of benefitsIf we are not able to make the right decisions, we will not be able to be a competitive company.

If you have any questions or comments about it opportunity cost, you can do it through our website. And if you want to practice more, you will find below this video, some printable exercises with solutions for you to do.