The concept of opportunity cost is that the economic cost of using a factor of production is the alternative use of that factor that is given up.
The potential gains that an individual, investor, or corporation foregoes while choosing one alternative over another are referred to as opportunity costs. Because opportunity costs are by definition invisible, they are frequently neglected. To correctly assess opportunity costs, the costs and advantages of each possible alternative must be analyzed and weighed against one another. Consideration of opportunity costs can help individuals and businesses make more profitable decisions. Opportunity cost is a strictly internal cost used for strategic planning; it is not included in accounting profit and is not reported externally.
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