Registered: Apr 2012
Posts: 1

Question: Explain the importance of the concept of opportunity cost in Economics. How does it relate to monetary cost?

I plan to define opportunity cost. Define other costs (Fixed Cost...).
Write about the importance of opportunity cost. (Investment, Profit, Individual Choice, International Trade)
However, i don't know what to write about the difference between monetary cost and opportunity cost.

Hope you can help. Thank You.

Registered: Sep 2008
Posts: 3404

I think opportunity cost relates to the option to invest in other projects. You could base the minimum return on the base rate or risk free rate. Then you could put options against that to see whether you get a better return from the offered investment. In terms of monetary cost I think it is weighing in the cost of inflation and the aspect of international trade on the currency value you hold. I don't see how fixed cost would be relevant unless you are assessing the actual running of the business in which cas you will have to look at variable costs and then the risks involved in such a project.

The time value of money will be important in your essay it will explain how the value of money depreciates over time due to inflation and how receiving money early on is better than later unless there is a high return from such delay. Compounding interest is something you need to address it is the opposite of inflation, however the low interest rate will cut the value of the return plus current high inflation would suggest that it is not a good idea to hold onto currency investments at the moment. Precious metals are the best hedge against inflation in my opinion you might want address that. Also portfolio diversification and the elimination of risk might be sub topic you could bring into the argument.

Registered: Aug 2011
Posts: 50

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Quote from cinhet:

Question: Explain the importance of the concept of opportunity cost in Economics. How does it relate to monetary cost?

I plan to define opportunity cost. Define other costs (Fixed Cost...).
Write about the importance of opportunity cost. (Investment, Profit, Individual Choice, International Trade)
However, i don't know what to write about the difference between monetary cost and opportunity cost.

Hope you can help. Thank You.

---

Registered: Jan 2007
Posts: 18231

"I'll gladly pay you tuesday for a hamburger today"

If it ends up Hookers are two for one on Friday, you are sol.

You missed out on the deal of a lifetime because you lent Wimpy the money for the hamburger.

Registered: Apr 2012
Posts: 1

This is main thing of human life,This provide valuable role in human life.It provide knowledge of different economics function.This is the study of how to best allocate scarce resources among competing uses.

Registered: Jan 2009
Posts: 1050

do your own homework a##hole

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