The consideration of opportunity costs may be relevant to a firm because they might be missing the value of one opportunity to pursue another option they see more fit for the firm (Marginal Revolution University, 2018). Opportunity cost is important to understand when it comes to a firm because this is something that should be taken into consideration when seeking new opportunities that have the potential to cause chaos. Opportunity costs can affect any business decision either positively or negatively because a firm could pass one opportunity that could be beneficial to them, but instead pass on this because they thought they saw another great opportunity. Another possibility could be passing on a bad opportunity in one area and moving onto another that brings in a greater reward. One example could be spending money on a luxurious vacation instead of spending money on a new car. Essentially you are giving up the opportunity to obtain that new car while being on a vacation.
Reference
Marginal Revolution University. (2018). What is opportunity cost? Retrieved from https://youtu.be/x-hYzRncxTc
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
