What are the items that make opportunity cost differ from the accountant's measure of cost?
What will be an ideal response?
A firm's opportunity cost includes the cost of using resources bought in the market, owned by the firm and supplied by the firm's owner. Economists and accountants both include the price of resources bought in the market as costs. But accountants omit costs included by economists. For instance, use of a building the owner has already purchased has an opportunity cost that accountants do not include. Additionally the normal profit, interest foregone, and economic depreciation are other opportunity costs not recorded by an accountant.
You might also like to view...
When Bank of America finances your purchase of a new car, you are
A) borrowing in the stock market. B) lending in the bond market. C) lending in the capital market. D) borrowing in the loan market. E) borrowing in the bond market.
Government debt which pays for ________ is a burden in that it yields no ________ benefits
A) hospitals, future B) ammunition for military target practice, current C) Social Security benefits, future D) public universities, current