AS Business Studies
Opportunity Cost
● Understand the concept of opportunity
cost.
● Identify opportunity cost in different
scenarios.
● Devise your own scenar...
(Dictionary.com)
The cost of an alternative that must be forgone in order to pursue a certain action. Put another way,
the...
The opportunity cost of going to
University is the money you would have
earned if you worked instead. On the
one hand, you...
Here's another example: if a gardener decides to
grow carrots, his or her opportunity cost is the
alternative crop that mi...
http://www|.investopedia.com/video/play
/opportunity-cost/
Watch this Video.
Mark decides to leave his job as a
Bank Manager and set up a
franchise
What is his opportunity cost?
Task 1 - Try to work ...
Sheila spends her start-up
marketing budget of £15,000 on a
direct mailing campaign
What is her opportunity cost?
Scenario...
To finance his start-up, Gavin
takes out a £100,000 bank loan
on which interest of 10% will be
paid
What is his opportunit...
Think of one scenario similar to the
previous examples given by me.
Share them with the person sitting next to
you to test...
Define the term “opportunity cost” and
give an example for a management
consultant
who leaves her job to set up an e-
comm...
AS Business Studies
Government and Entrepreneurs
When you speak with successful
entrepreneurs, they will often claim that
their achievements are in spite of
government act...
You should appreciate that government
likes enterprise and entrepreneurial
activity.
Why???
Governments
•Create jobs and help keep unemployment
low
•Invest and innovate
•Generate substantial export earnings
•Pay substantial am...
Revision
Opportunity cost and governments
Opportunity cost and governments
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Opportunity cost and governments

  1. 1. AS Business Studies Opportunity Cost
  2. 2. ● Understand the concept of opportunity cost. ● Identify opportunity cost in different scenarios. ● Devise your own scenarios for opportunity costs LO
  3. 3. (Dictionary.com) The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action. What is Opportunity Cost?
  4. 4. The opportunity cost of going to University is the money you would have earned if you worked instead. On the one hand, you lose 3-4 years of salary while getting your degree; on the other hand, you hope to earn more during your career, thanks to your education, to compensate for the lost wages. Example 1
  5. 5. Here's another example: if a gardener decides to grow carrots, his or her opportunity cost is the alternative crop that might have been grown instead (potatoes, tomatoes, pumpkins, etc.) In both cases, a choice between two options must be made. It would be an easy decision if you knew the end outcome; however, the risk that you could achieve greater "benefits" (be they monetary or otherwise) with another option is the opportunity cost. Example 2
  6. 6. http://www|.investopedia.com/video/play /opportunity-cost/ Watch this Video.
  7. 7. Mark decides to leave his job as a Bank Manager and set up a franchise What is his opportunity cost? Task 1 - Try to work out the opportunity Cost
  8. 8. Sheila spends her start-up marketing budget of £15,000 on a direct mailing campaign What is her opportunity cost? Scenario 2
  9. 9. To finance his start-up, Gavin takes out a £100,000 bank loan on which interest of 10% will be paid What is his opportunity cost? Scenario 3
  10. 10. Think of one scenario similar to the previous examples given by me. Share them with the person sitting next to you to test if they can identify the opportunity cost. Your Turn
  11. 11. Define the term “opportunity cost” and give an example for a management consultant who leaves her job to set up an e- commerce business (4 marks) Exam Question
  12. 12. AS Business Studies Government and Entrepreneurs
  13. 13. When you speak with successful entrepreneurs, they will often claim that their achievements are in spite of government action rather than because of government support! Governments
  14. 14. You should appreciate that government likes enterprise and entrepreneurial activity. Why??? Governments
  15. 15. •Create jobs and help keep unemployment low •Invest and innovate •Generate substantial export earnings •Pay substantial amounts of tax •Encourage competition in markets WHY????? Entrepreneurs:
  16. 16. Revision

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