OPPORTUNITY COST AND MONEY COST

OPPORTUNITY COST AND MONEY COST

Opportunity cost, also referred to as or true cost, by definition is the g services forgone by employing the resources in their best or most profitable alternatively simply means an expression of cost in forgone alternatives.

In other words, opportunity cost is the satisfaction of one want at the expense of another want. It refers to the wants left unsatisfied in order to satisfy another pressing need.

Money cost on the other hand the amount of money spent to p: particular good or service. It can described as the money value of a colt is the cost in terms of legal tender (currency) value.

For example, a farmer has 6100 two pressing wants, namely to buy a o a hoe, each of which costs 6100. The farmer has to choose to buy one of the items expense of the other as a result of his available resources.

If the farmer decides the cutlass and forgo the hoe, N100 is thus the money cost of the cutlass he bought while opportunity cost of the cutlass is the hoe he failed to buy with the same amount of money.

Therefore, the opportunity cost of any item is referred to as the alternative forgone in order to buy an item while money cost is the amount of money spent in buying such item.

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