08 Explain what is meant by 'opportunity cost', using an example.

[Mamoona Hussain]

Opportunity cost is the benefit of the next best alternative forgone. For example, if a tourist has to decide between flying to Italy or to Switzerland, and if they choose to visit Italy, then the benefits they could have had by going to Switzerland is the opportunity cost.

[Abdullah Altaf]

[KN] Opportunity cost is the next best alternative given up when making a choice.
[APP] For instance, a coffee shop owner has limited funds and must choose between buying a coffee machine (to improve efficiency) or a tea maker (to increase variety). If they choose the coffee machine, the tea maker becomes the opportunity cost.
[AN] If a competitor buys a tea maker, customers who prefer tea may switch, leading to lower sales, reduced profit, and potential financial difficulties.

[Areeba Arshad]

[KN] Opportunity cost is the next best alternative forgone when making a choice.
[APP] For example, a student might choose to buy a textbook instead of cinema tickets.
[AN] This shows that the cinema tickets are given up as the next best option. The student gains the benefit of the textbook but loses the enjoyment of the movie, meaning every choice involves a sacrifice of another benefit.

[sarah_naeem]

(kn) The advantage of the next best option that is given up when making a decision is known as opportunity cost.
(app) For example, if an entrepreneur uses their savings to open a café instead of investing in stocks, the opportunity cost is the potential profit they could have earned from the stock investment.
(an) By thinking about what they will give up if they choose one option over another, this idea helps businesses weigh their choices and make better decisions and gives them more opportunities for growth.

[Abdur Rehman khan]

[KN] Opportunity cost is the next best alternative forgone due to shortage of resources.
[APP] For instance, a student decides to buy a textbook instead of cinema tickets so the entertainment from watching the movie is sacrificed.
[APP] this shows that people have to make choices and every choice requires sacrifice of other one thus the the cinema ticket becomes the opportunity cost.

[Arham Qadri]

[KN] It is the next best alternative forgone when making a decision
[APP] For example if a student buys headphones instead of a movie ticket then his enjoyment of movie will be sacrificed
[AN] This shows that decision making involves opportunity cost. Hence a result the opportunity cost of buying headphones is the movie ticket

[M huzaifa jillani]

(KN)
Opportunity cost means the next best choice you have to give up when you decide to do something.
(APP)
For example, if you have money to buy either a phone or a watch and you buy the phone the Opportunity cost is the watch you could not get.
(AN)
This shows that every choice has a cost because you miss the benefits of the other option.
Business and people must think carefully before deciding.

[amaimatif]

Opportunity cost means the next best alternative that is given up when making a choice. For example, if a student buys a textbook instead of cinema tickets, the fun and enjoyment of watching a movie is the alternative lost. Therefore, the cinema tickets are the opportunity cost.

[Haiderabbas]

KN: Opportunityy cost is the next best alternative given up when making a choice.

App for e.g. if you study for extra hours you give up hanging out with friends, that is the opportunity cost. If Government decides to build a road usding a limited amount of funds, it cannot build a hospital ie the opportunity cost

AN Knowing opportunity costs helps people weigh benefits vs what they sacrifice, so smarter decisions are made leading to a more e productive life.

[SofiaRazaKhan]

[KN] Opportunity cost is the next best option that is given up when a choice is made.
[APP] If a cafe decides to spend its budget on renovating its interior rather than adding a delivery service the delivery service is the opportunity cost.
[AN] this shows that choosing one option means sacrificing the benefits of another.

[Mashal Umair Niazi]

KN: Opportunity cost is the second best option a buisness/government/consumer has that they don't choose.
APP: Example, if the government has set funds that only allow them to build one of either a hospital or a school - and they choose the hospital, then the school is their oppurtunity cost
AN: This is because the benefits of having the school, like better education, more skilled workers, higher literacy rates etc have all been lost therefore it has 'cost' the government, and it is the 'second-best option' as after evaluating the benifits and cons the hospital was the better choice as it is a more urgent need for the people and more direly required, aswell as citizens would be more satisfied (life/death is more important than education).

[masabtahir]

[KN] opportunity cost means next best alternative forgone (sacrificed).
[APP] for example, a shoe manufacturing business buys efficient machine instead of a new outlet, so the "new outlet" is the opportunity cost.
[AN] Efficient machine would increase output (productivity), leading to economies of scale (less cost of production), making business offer better price to the customers, more sales whereas outlet would not have ensured better prices.

Examiner Comments:
> Answer updated to 3/3

[Ruqyia Salman]

[KN] Opportunity cost is the next best alternative that is given up when making a decision.
[APP] For example, if a student decides to buy a textbook instead of cinema tickets, they give up the enjoyment of watching a movie.
[AN] This means the cinema tickets represent the opportunity cost, as they are the next best alternative sacrificed to gain the textbook.