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

[Sir Afzal Shad]

08 Explain what is meant by 'opportunity cost', using an example.
Hint: KN: The next best alternative foregone > APP: Choosing to buy a textbook instead of cinema tickets > AN: The tickets are the opportunity cost.

Possible Structure - 3 Marker
[KN] >> [APP] >> [AN]

Sample Answer:
[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.

[hassanalizafar]

[KN] Opportunity cost is the next best alternative that is given up when making a choice.
[AAP] For instance, if a student buys a textbook instead of cinema tickets, the enjoyment of watching the movie is sacrificed.
[AN] This highlights how money has alternative uses, the importance of prioritising essential spending, and the need to consider benefits lost from other options. As a result, the cinema tickets become the opportunity cost of buying the textbook.

[shamaim shakeel]

Opportunity cost is the next best alternative that has to be given up when making a choice. For example, if a government has limited funds and decides to build hospitals instead of schools, then the schools become the opportunity cost. This shows that decision making involves a tradeoff, as choosing one option means sacrificing the benefits of another

[Uqbah hadeed kayani]

[kn] opportunity cost is the next best alternative forgone when a choice is made [app] for example if one decides to buy a textbook rather than a movie ticket [an] the movie ticket he gave up is his opportunity cost

[abdurrehman waseem]

KN: opportunity cost means the next best alternative foregone while making a decision
App:for example, a student buy books instead of buying cinema tickets
AN:The cinema tickets are the opportunity cost because they are sacrificed.

[Abdullah Mohsin]

[KN]Opportunity cost is the next best alternative forgone when making a choice.
[APP]For example, if a car manufacturer has $10,000 and chooses to spend it on advertising rather than buying new machinery, the opportunity cost is the increased production that the machinery could have provided.
[AN]This means businesses must carefully consider their decisions, as choosing one option always involves giving up the benefits of another. Making the wrong choice could reduce efficiency or profitability in the long run.

[Aarib Saad]

(KN)Opportunity cost is the next best alternative given up in choosing an item or making a decision.
(APP)For instance, a car manufacturer wants to increase sales and it can do so either by launching a new car model or by advertising, however due to lack of resources (capital) it can only choose one option. If it chooses to advertise then launching new car model will be the opportunity cost and vice versa.
(AN+)Thus, limiting the sales revenue that can be generated by the business, this in turn will lead to difficulty in covering costs of manufacturing cars as car manufacturing is very expensive, further worsening business cashflow.

[Shaliza khawaja]

(KN)opportunity cost is the next best alternative forgone because of making a choice as you have less resources
(APP)for example if a clothing factory spends more on employee training the alternative option could have been spending more advertisement (AN)however this could mean employees are more trained and will make less mistakes not slowing down the work and improving quality eventually increasing profit which they can reinvest in the business

[areeshasaber]

[kn]Opportunity cost is the value of the next best alternative forgone when a decision is made.
[app]For example, A clothing factory can produce shirts or jackets with the same resources.
If it makes shirts, the opportunity cost is the jackets not produced.
[an+]It misses out on sales revenue and profit from jackets, if jacket demand were higher it’ll lose competitiveness, and since competitors will be making jackets, it may become harder to expand in the future.

[Muaz Aamir]

KN: Opportunity cost is the value of the next best alternative you give up when making a choice.
AP: For example, if a student spends time working part-time, the opportunity cost is the time they could have used to study.
AN: This shows that every choice has a cost, even if it’s not a money cost.
AN+: Understanding opportunity cost helps people make better decisions, use their time wisely, and focus on what gives the most benefit.

[Subhan Zafar]

{KN}Opportunity cost is the next best alternative given up by chosing another item.
{APP}For Instance,if a boy buys a car instead of a plot then the plot would be its opportunity cost as he will give up the value inc of plot after a while.
{AN}This shows the priority of differnet sets of customer that how do that deal with their prioritys and need

[Abdul Hadi]

KN: Opportunity cost is the next best alternative foregone when making a choice.
APP: For Example if a student chooses to buy a textbook instead of cinema tickets, the cinema tickets are the opportunity cost.
AN: This means the student has to sacrifice leisure for study, the decision could improve academic performance but reduce enjoyment, and it shows how limited resources like money forces the person to prioritise.

[Fatima ibtehaj]

[KN]It is the next best alternative forgone due to shortage of resources.
[APP]For example; the government wants to build a school and a hospital. The schools costs and investment of $40,000 and the hospital for $70,000 and the govts budget is $100,000.The govt cannot choose both due to lack of capital and so if they choose to build the school then the hospital will be the oppurtunity cost and vice versa.
[AN]Thus opportunity cost helps a business/govt to manage their expenses leading towards less cashflow problems and more opportunities for growth.

[Hajra]

[KN] Opportunity cost is the next best alternative that is given up when a choice is made. [AP] For example, if a student spends their evening working a part-time job instead of revising, the opportunity cost is the study time they sacrificed. [AN] This matters because every decision involves giving something up, in this case the student gains money but may risk lower grades, showing how opportunity cost affects outcomes.

[Mahnoor satti]

[KN] Opporunity cost is next best alternative given up due to limited resources.
[APP] For instance, we can only buy one thing either a textbook or cinema ticket. Buying the textbook can help to get knowledge which is useful in the futuer, however, buying cinema ticket is only one time entertainment and it is also not beneficial.
[AN] Thus buying textbook will result in cinema ticket to be our opporunity cost.