Define the opportunity cost, Accounting Basics

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Q. Define the Opportunity cost?

Opportunity cost -- a useful notion in evaluating alternate opportunities. If you choosealternative A, you can't choose B, C, or D. What is the cost or loss of profit of not choosingB, C, or D? This cost or loss of profit is opportunity cost of alternative A. In personal lifeyou can buy a car rather than taking a European vacation. Opportunity cost of buying thecar is the loss of the enjoyment of the vacation.


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