What is the definition of Opportunity Cost?
- Posted on November 20, 2019
- Financial Terms
- By admin admin
Opportunity cost is a term used in economics to show the costs of pursuing a particular action. It is the difference in the cash value of the action taken, and the best possible action available at the time. For example, if you keep your cash in a savings account earning 1% interest but there was a fund available to invest in which was offering 4%, the opportunity cost of your savings account would be 3% (4-1).
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