opportunity cost
What opportunity cost means in Business A-Level, as defined for AQA.
Definitions of opportunity cost
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Reference: AQA
Judging the value against what else the money could do, such as reducing borrowing or refurbishing existing outlets.
The finance and management time spent on one option are not available for another, so the judgement is comparative.
The true cost of the choice made is what the rejected branch would have delivered.
Topics that use opportunity cost
- Assessing innovation (AQA A-Level)
- Strategic decision making (A-level only) (AQA A-Level)
- Understanding management decision making (AQA A-Level)
Related terms
- Automation and the cost structure
- average rate of return
- benchmarking
- business ethics
- capacity and quality
- competitive pressure
- Corporate social responsibility
- decision trees
Using opportunity cost in the exam
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