Question

Q 10.1: Sukui Electronics decided to expand their product line to include GPS trackers. They estimate that over the next 3 years this project will increase their net income by $1.7 million. To do this, they decided not to add a product line of deep sea diving watches. They estimate that over the next 3 years this project would have increased their net income by $800,000. This is an example of

Answer 1

Answer: opportunity cost of capital

Explanation:

The example in the question above is an opportunity cost of capital. Opportunity cost of capital simply refers to the potential loss that an individual makes because of making a choice at the expense of another one.

Here, the opportunity cost of capital is the $800000 that could have been made if they decided to add a product line of deep sea diving watches.