Opportunity Cost
Formula:Opportunity Cost = (Cost of Option A - Cost of Option B) / Benefit of Option A
Introduction to Opportunity Cost Calculator
Opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen. This calculator helps to quantify the impact of choosing one option over another in terms of forgone benefits. The formula takes into account the cost of two options, Option A and Option B, and the benefit derived from Option A. The result is a measure of the relative cost of choosing one option over the other in terms of the benefits lost.
Parameter usage:
costOfOptionA
= cost of Option AcostOfOptionB
= cost of Option BbenefitOfOptionA
= benefit derived from Option A
Example valid values:
costOfOptionA
= 1000costOfOptionB
= 800benefitOfOptionA
= 200
Output:
opportunityCost
= opportunity cost of choosing Option A over Option B
Data validation
The cost and benefit parameters should be greater than zero. The cost of Option A should be greater than the cost of Option B.
Summary
This calculator computes the opportunity cost of choosing one option over another by considering the costs and benefits associated with each option. It does not depend on any specific unit of measurement.
Tags: Economics, Opportunity Cost, Decision Making