In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives. Assuming the best choice is made, it is the "cost" incurred by not enjoying the benefit that would have been had by taking the second best available choice. The New Oxford American Dictionary defines it as "the loss of potential gain from other alternatives when one alternative is chosen." As a representation of the relationship between scarcity and choice, the objective of opportunity cost is to ensure efficient use of scarce resources. It incorporates all associated costs of a decision, both explicit and implicit. Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, pleasure, or any other benefit that provides utility should also be considered an opportunity cost.
Explicit costs are the direct costs of an action (business operating costs or expenses), executed through either a cash transaction or a physical transfer of resources. In other words, explicit opportunity costs are the out-of-pocket costs of a firm, that are easily identifiable. This means explicit costs will always have a dollar value and involve a transfer of money, e.g. paying employees. With this said, these particular costs can easily be identified under the expenses of a firm's income statement and balance sheet to represent all the cash outflows of a firm.
Examples are as follows:
Land and infrastructure costs
Operation and maintenance costs—wages, rent, overhead, materials
Scenarios are as follows:
If a person leaves work for an hour and spends 200onofficesupplies,thentheexplicitcostsfortheindividualequatestothetotalexpensesfortheofficesuppliesof200.
If a printer of a company malfunctions, then the explicit costs for the company equates to the total amount to be paid to the repair technician.
This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.
In economics, scarcity "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good." If the conditions of scarcity didn't exist and an "infinite amount of every good could be produced or human wants fully satisfied ... there would be no economic goods, i.e. goods that are relatively scarce..." Scarcity is the limited availability of a commodity, which may be in demand in the market or by the commons.
In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives. Assuming the best choice is made, it is the "cost" incurred by not enjoying the benefit that would have been had by taking the second best available choice. The New Oxford American Dictionary defines it as "the loss of potential gain from other alternatives when one alternative is chosen.
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing. This acquisition cost may be the sum of the cost of production as incurred by the original producer, and further costs of transaction as incurred by the acquirer over and above the price paid to the producer.
L'objectif de ce cours est d'introduire les étudiants à la pensée algorithmique, de les familiariser avec les fondamentaux de l'Informatique et de développer une première compétence en programmation (
Introduction to economic analysis applied to environmental issues: all the necessary basic concepts, including cost-benefit analysis, for environmental policy making and its instruments (examples: cli
The course provides a market-oriented framework for analyzing the major financial decisions made by firms. It provides an introduction to valuation techniques, investment decisions, asset valuation, f
Ce cours initie à la programmation en utilisant le langage C++. Il ne présuppose pas de connaissance préalable. Les aspects plus avancés (programmation orientée objet) sont donnés dans un cours suivan
Learn to optimize on smooth, nonlinear spaces: Join us to build your foundations (starting at "what is a manifold?") and confidently implement your first algorithm (Riemannian gradient descent).
Develop your promising idea into a successful business concept proposal, and launch it! Gain practical experience in the key steps of the venture creation process, including marketing and fundraising.
In this dissertation, I develop theory and evidence to argue that new technologies are central to how firms organize to create and capture value. I use computational methods such as reinforcement lear
This thesis develops three models that study the motivation of various agents to take on debt,
and the impact that excessive financial leverage can have on social welfare.
In the chapter "Short-term B
This article sheds light on how industry fluctuations affect firms' propensity to innovate. We test two seemingly conflicting arguments that suggest how firms are more or less inclined to engage in in