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Opportunity cost : your ressources are sometimes better employed elsewhere

Opportunity cost : your ressources are sometimes better employed elsewhere Opportunity cost : your ressources are sometimes better employed elsewhere
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The opportunity cost (or alternative cost) is an economic concept that considers the cost of not doing an activity so that to use its resources to achieve another one.

These costs are not counted as such but are taken into account in the decision-making process.

The opportunity cost translates as the company's decision to allocate one available resource to one project rather than another in order to make the best possible gain. In in the example above, if the company decides to assign its production tool to the X model to the detriment of the Y model, and retains the B2 option for some strategic reason, the cost of opportunity is (72-55) € 17 million.

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Source and adaptation :

Fred Wilson, Opportunity cost, AVC, 2010 

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