Question

The seller of product a has no idle capacity and can sell all it can produce at $60 per unit. outlay (variable) cost is $12. what is the opportunity cost, assuming the seller sells internally?

Answer 1

The answer is $48.

The seller of product a has no idle capacity and can sell all it can produce at $60 per unit. outlay (variable) cost is $12. $48 is the opportunity cost, assuming the seller sells internally

It is calculated as follows:

Opportunity cost= Production cost- Outlay cost

                             = 60-12

                               =$48

Opportunity costs represent the potential benefits which any individual or investor, or  any business misses out on when choosing one alternative over another.

Because the opportunity costs are generally unseen by definition, they can be easily overlooked. Understanding of the potential missed opportunities when any business or any individual chooses one investment over another investment allows for better decision making.

To know more about opportunity cost here:

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