A DEEP DIVE INTO
What Is Opportunity Cost
Learn to evaluate life and business choices via the lens of Opportunity Costs
93 key ideas from
3 books
5 articles
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Skills
Overview
Key Ideas
FAQ
What you'll learn
The impact of opportunity cost on personal and professional life
Evaluating the benefits and drawbacks of different choices
Understanding the concept of opportunity cost
How to make better decisions by considering opportunity cost
Ideas from books, podcasts, videos & articles
Thinking, Fast and Slow
Predictably Irrational
Thinking in Bets
Influential people you will learn from
Daniel Kahneman
Dan Ariely
Annie Duke
3 Top Key Ideas (93 total)
What Is Opportunity Cost?
Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. Because opportunity costs are unseen by definition, they can be easily overlooked.
Understanding the potential missed opportunities when a business or individual chooses one investment over another allows for better decision-making.
Formula and Calculation of Opportunity Cost
Opportunity Cost = Return on best foregone option (FO) – return on chosen option (CO)
The formula for calculating an opportunity cost is simply the difference between the expected returns of each option. company is faced with the following two mutually exclusive options:
Opportunity Cost and Risk
The key difference is that risk compares the actual performance of an investment against the projected performance of the same investment, while opportunity cost compares the actual performance of an investment against the actual performance of another investment.
The key difference is that risk compares the actual performance of an investment against the projected performance of the same investment, while opportunity cost compares the actual performance of an investment against the actual performance of another investment.
Still, one could consider opportunity costs when deciding between two ri
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