A country’s government is preparing its budget. It has some surplus which can be used for paying off its debtor or it can be used for introducing some welfare schemes for its citizens such as subsidies.If it pays off its debt instead of a welfare scheme, it would be classified as an opportunity cost for its citizens.

Paying off Debt Versus Spending on Welfare by the Government

Let’s say you got $50,000 in your bank account, which you don’t need immediately. You can have many options with this cash. For example, you can just keep this cash, or you can invest this money in stocks. Let’s say you would have invested wisely that money in some good stocks, and after a year, 50,000 would become $60,000. On the other hand, if you keep this money idle instead of investing in cash, then your opportunity cost will be the difference between 60000 and 50000, i.e., $10,000

Stock Versus Cash

A person named X is currently working in a company and drawing some salary. X is getting an option to do the graduation for 2 years, but for that, he/she must leave his/her job. If he/she doesn’t go to graduation, the opportunity cost will be a higher degree plus the additional salary that he/she might get because of this degree. On the other hand, if he/she opts for the job, then the opportunity cost will be 2 years’ salary that has to be foregone.

Graduation Versus Salary

You are having shares of a company worth $5,000. You are thinking of selling that shares now or waiting for 2 more months. Let’s say, after 2 months, shares would be worth $6,000. If you sell the shares now, then your opportunity cost would be 6000-5000= $1,000, which you could have gotten if you would have waited for 2 more months.

Selling Stocks Now and 2 Months Later

You have got $20,000 which you are thinking of either investing in shares of some company, or you can invest this money in getting a higher degree in a good university. If you invest in stocks, then your opportunity cost would be higher degrees and a higher salary because of the degree. But if you invest in a higher degree, then your opportunity cost would be the profit gained from those shares.

 Investing in Stocks or Higher Degree

Your school has announced a vacation. You finally get a chance to go on holiday for the next 1 month. But suddenly you come to know that training is scheduled for your favorite sports which you do not want to miss. So, if you go on vacation, your opportunity cost will be missing the training session, and if you stay for training, then your opportunity cost will be enjoying the vacation.

Vacation Versus Training

You have a steady job with a good income, but your passion is to open your own business, which requires you to leave your current job, and you have to spend a lot of money on opening a business. You have both options. If you are choosing a steady job instead of opening a new business, then your opportunity cost will be not having the work you wanted and maybe success because of the new business. If you start your business, the opportunity cost would be a steady job and a regular paycheck.

Entrepreneurship Versus Steady Job

<ul><li>Graduation Versus Salary</li><li>Stocks Versus Cash</li><li>Vacation Versus training</li><li>Paying off debt Versus Spending on Welfare by the government</li><li>Entrepreneurship versus steady job</li><li>Selling Stocks now and 2 months later</li><li>Investing in stocks or a higher degree</li></ul>

Top 7 Examples of Opportunity Cost

Learn to evaluate life and business choices via the lens of Opportunity Costs

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Problem Solving

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Business

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Money & Investments

What Is Opportunity Cost

Opportunity cost examples that provide an outline of the most common Opportunity Cost.

Guide to Opportunity Cost Examples. Here we discuss its definition and the top 7 examples along with detailed overview and explanations.