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Oppurtunity cost

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Venkat
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Oppurtunity cost

Postby Venkat Tue Jul 22, 2014 11:10 am

Hi Saket,

I saw some questions on this topic. What is exactly oppurtunity cost?
Try to get the information from PMBOK but there is nothing mentioned.

Could you please clarify.

Thanks a lot,
Venkat
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saket
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Re: Oppurtunity cost

Postby saket Tue Jul 22, 2014 4:33 pm

Its a cost of lost opportunity....

if one decide to do leave the current job and do business. whatever salary one is getting is the opportunity cost for the business decision he has made.

Another example, if you can have ice cream or cake , so if you decide to have cake, the ice cream is your opportunity cost.

We use this in decision making, for example if the ice cream is expensive than cake you may like to have it... or vice verse

This is how wikipedia defines it.

In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusive alternatives given limited resources.

http://en.wikipedia.org/wiki/Opportunity_cost
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Venkat
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Re: Oppurtunity cost

Postby Venkat Tue Jul 22, 2014 9:07 pm

Thanks, got it.

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