An opportunity cost table is developed by first subtracting the minimum value in each row from all other row values and then repeating this process for each column.
Question
An opportunity cost table is developed by first subtracting the minimum value in each row from all other row values and then repeating this process for each column.
Solution
The process of developing an opportunity cost table involves the following steps:
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Identify all the options: The first step in creating an opportunity cost table is to identify all the options that are available. This could be different investment opportunities, different ways to spend time, etc.
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Determine the value of each option: The next step is to determine the value of each option. This could be the monetary value in the case of investment opportunities, or the enjoyment or productivity value in the case of ways to spend time.
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Subtract the minimum value: Once the value of each option has been determined, the next step is to subtract the minimum value in each row from all other values in that row. This gives the opportunity cost of each option in terms of the other options.
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Repeat for each column: After the opportunity costs have been calculated for each row, the process is repeated for each column. This gives the opportunity cost of each option in terms of the other options in the column.
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Analyze the table: Once the opportunity cost table has been completed, it can be analyzed to determine the best option. The best option is the one with the lowest opportunity cost.
Remember, opportunity cost is the cost of forgoing the next best alternative when making a decision. It's not always about money, but also about time, resources, and personal satisfaction.
Similar Questions
An opportunity cost is*1 pointA cost common to all alternatives in question and not clearly or practically allocable to any of the alternativesThe profit foregone by selecting one alternative instead of anotherA cost that may be shifted to the future with little or no effect on current operationsThe difference in total costs that results from selecting one alternative instead of another
Opportunity cost refers to
Opportunity cost
How do opportunity costs factor into decision making in managerial economics?They represent the cost of the next best alternative foregoneThey describe the cost of producing one more unit of a goodThey are the costs associated with holding inventoryThey are the costs that remain constant regardless of the level of output
Table 9.3. Quantity Price(dollars)Total Revenue(dollars)Total Variable Cost(dollars)Total Cost(dollars) 0 21 0 050 1 20 20 16 66 2 19 38 31 81 3 18 54 45 95 4 17 68 59109 5 16 80 75125 6 15 90 93143 7 14 98112162 8 13104140190 9 12108180230 10 11110230280 Table 9.3 shows the demand and cost schedules for a monopolistically competitive firm.Refer to Table 9.3. What is the best course of action for the firm in the short run? It should not cut its price, but it should increase its sales by advertising. You Answered It should increase its sales by lowering its price. It should shut down. Correct answer It should stay in business because it covers some of its fixed cost.
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