00:01
So what is opportunity cost? let's just first define it.
00:04
Opportunity cost is the value foregone by making a choice.
00:15
And that value is the next best opportunity, right? so the idea is that every time you make a choice, you are choosing not to do something else.
00:29
And those other things might be valuable and by making choice a you're losing the value of b so these are usually intangible and let me give an example here for an example imagine that we're taking a choice between a and b so a is is plus 30, b is plus 20, you would say, for example, that the cost of b is perhaps minus 10.
01:06
Because what we're doing by choosing b is that we are giving up 30, right? this here would be the opportunity cost of choosing b, right? you are giving up the opportunity to get that plus 30.
01:20
So first of all, let's just think about which of these can be accurate.
01:28
So a, econ, so let's say, what do we have? we have accounting cost minus the econ cost.
01:39
This is incorrect, right? the econ cost devolves into accounting and opportunity, right? right.
01:47
If this was the other way around, it would be correct.
01:51
Right.
01:52
You would need econ cost minus accounting is equal to opportunity cost...