Opportunity Cost: The invisible costs that affect profits

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Opportunity cost helps entrepreneurs evaluate not only the direct costs of a product or service, but also the lost opportunities that arise when choosing one option over another. For example, if you decide to invest in one project, you automatically give up the opportunity to invest in another project that could bring greater profit. Understanding and accounting for opportunity cost allows entrepreneurs to make more informed decisions, optimize resource use, and minimize hidden costs, which ultimately leads to increased profits and business efficiency.

The essence of opportunity cost: lost profit as a cost
Opportunity cost is the value of the best alternative that guangdong mobile database must be given up when choosing one course of action. It is not just the price of a product or service, but the implicit costs that arise in the form of lost profits.

Example:

Opening a cafe : Investing in equipment, renting premises, raw materials and staff.
Invest in stocks : Potential profit from rising stock prices.
By choosing to open a cafe, you are foregoing investing in stocks. The opportunity cost of opening a cafe is the potential profit you could have made by investing in stocks.