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Digital Customer Experience: Core Concepts
Opportunity Cost Calculation
Understanding and calculating opportunity cost—the value of the next best alternative forgone—is crucial for rational decision-making and efficient resource allocation in business. ✨
Article Points:
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Opportunity cost is the value of the next best alternative not taken when a decision is made.
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It arises from scarcity, as limited resources force trade-offs.
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Essential for rational decision-making, helping evaluate the true cost of choices beyond explicit monetary expenses.
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Calculated as: 'Return on Best Forgone Option - Return on Chosen Option'.
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Applied in capital budgeting, resource allocation, make-or-buy decisions, and product mix optimization.
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Helps prioritize projects, optimize resource use, and maximize true profitability.
Source:
Opportunity Cost Calculation
Opportunity Cost Calculation
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Source:
Opportunity Cost Calculation
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