14 Analyse one way in which considering opportunity cost can help a business make better decisions.

[Sir Afzal Shad]

14 Analyse one way in which considering opportunity cost can help a business make better decisions.
Hint: KN: Better allocation of resources > APP: Choosing to use a factory to make its most profitable product > AN: Maximises return on assets.

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

[hassanalizafar]

[KN]Considering opportunity cost helps a business decide the best use of resources.
[AAP]For example, a manufacturer might choose a machine-intensive production method instead of labour-intensive methods.
[AN]This can lead to higher efficiency, lower long-term costs, and greater output consistency. As a result, the business maximises productivity from its scarce resources and improves profitability.

[Muaz Aamir]

KN: Considering opportunity cost helps a business compare the benefits of different choices.

AP: For example, a firm deciding between investing in new machinery or opening another store.

AN: This means the business can see what it must give up in each case.

AN+: As a result, it avoids wasting resources, makes more profitable decisions, and reduces the risk of failure.

[Uqbah hadeed kayani]

[kn] it may help in making better decisions as they are finding better uses / allocation for there resources [app] for example they decide to use a factory to produce there most profitable products they could reduce the risk of faults in there products [an] this maximises there return on assets allowing them to reinvest and grow more

[Abdul Hadi]

KN: Considering opportunity cost helps a business decide the best use of resources.
APP: for example if a coffee shop wants to buy a new coffee machine and renovate its interior, the coffee shop might go for renovation.
AN: This means that the coffee shop has decided for renovation in order to improve its ambience as, if the shop will have nice decor than it will attract the customers and that will allow the shop to create demand for its coffee, which will allow the business to charge higher prices for the ambience and earn more profits, making it differentiate itself from others

[Abdullah Mohsin]

[KN] Considering oppertunity cost helps the business figure out the pros and cons of choosing different options
[APP] For instance, a car manufacturer wants to expand their production line by introducing a new SUV which would help attract customers that want to buy a SUV, and they want to expand their business by purchasing a new factory which would help increase the supply of vehicles
[AN] Opportunity cost helps the business decide whether producing a new SUV or expanding by purchasing a new factory would increase revenue in the fastest way possible, while not sacrificing long-term growth and profitability.

[shamaim shakeel]

KN] Opportunity cost is the benefit a business gives up when choosing one option over another.

[APP] For example, if a business uses its money to buy new machines, it gives up the chance to spend that money on advertising. By comparing both options, the business can see which choice gives the bigger benefit.

[AN] This helps the business make better decisions because it avoids wasting scarce resources and focuses on the option that brings the most profit or growth.

[Shaliza khawaja]

(KN) opportunity cost is the next best alternative forgone
(APP) for example a software company needs a new software update foe the whole company and more computers
(AN) company would see which one benefits them more with there limited resources if they choose new update for the whole company the existing computers would gain more speed meaning work would be completed before deadline, satisfying ther customers and hence gaining a competitive edge.

[Aarib Saad]

(KN)It will encourage the business to analyze multiple decisions and their outcomes.
(APP)For instance, if a car manufacturer wants to increase sales revenue and is considering either launching a new car model or advertising, then due limited capital it will need to decide and make profit projections for both choices.
(AN)Thus, making it so that the business will be able to make decisions more accurately, allowing it to attract a higher amount of customers after analyzing both options, thus boosting sales revenue and allowing for further expansion in the future.

[abdurrehman waseem]

KN:opportunity cost means the next best alternative forgone when making a choice
APP:for example,A business have limited funds
may have to make a choice between buying a coffee machine or a oven
AN:By comparing opportunity costs the business compare which option make long term benefits,
increase profit and boost sales

[Subhan Zafar]

{KN}Considering the opportunity costs help business decide what the best one does.
{APP}for example a business may chose workers to work rather then machines to work.
{AN}this can lead to more detailed tasks performed by workers rather then machines and this would save the cost and capital that would be invested for machines.

[Mahnoor satti]

[KN] It can help the business to decide thoes resources which will give more better outcome.
[APP] For instance, owner of a cafe is confused between buying a new and improved coffee machine or a oven.If buying oven can help him to add more things on to its menu which can attract more customer than buying a new coffee machine than he should chose the oven and make the coffee machine as his opporunity cost.
[AN] Thus this will increase his sales leading to higher profit which can help him buy the coffee machine in the future.

[Ayaan Fayaaz]

[KN]Business have limited resources so they must consider opportunity cost before making a decision.

[APP]For instance, a firm may compare using funds to upgrade machinery or to advertise the product.

[AN]Considering opportunity cost helps the firm pick the option with the greater long term benefit leading to better decision making
[AN+] This improves efficiency and reduce wastes and expenditure.

[areeshasaber]

[kn] Considering opportunity cost helps a business allocate resources more effectively.
[app] A factory owner may choose to use their factory to produce the most profitable product instead of a less profitable alternative.
[an+] This generates the highest return, reduce wasted resources, and encourage prioritization.

[Abdullah Altaf]

[KN] Better allocation of resources.
[APP] Since before launching the product the business would do market research for both the choices to see which is more profitable hence the business would produce product according to customer demand resulting in high chances of product success.
[KN] Hence it will lead towards high sales and profit resulting in an increase in market share.