In our day-to-day life, we often encounter a situation where we delicately need to make a decision over exclusive choices kept in front. And, we need to sacrifice the other choices to get the benefits from the chosen one. Consequently, we tend to choose the one which is more fruitful or the one which makes us feel content.
The same theory holds wellin the microeconomics concepts such as opportunity cost and profit maximization.Here the choices sacrificed are the opportunity cost and the choice we choose to gain more fruits is profit maximization.
You need to understand these intense concepts properly in order toget-to-the-point answers for opportunity cost and profit maximization homework. But how will you understand these underlying topics? Here is the answer to all your problems related to studies and homework.
A Simple Definition of Opportunity Cost
Opportunity cost is a topic of Microeconomics. It is also referred as alternative cost.
Opportunity cost is the possible gains that are surrendered to receive good returns from a mutually exclusive option selected.
The illustration given below will make the definition more clear.
For example, a restaurant owner would like to improve the ambiance of his restaurant to attract more customers(more customers yield more profit). At the same time, he also thinks to reinvest on more efficient kitchen appliances or equipment (more efficient appliances provide quick food delivery)He can invest only on one option. So he needs to surrender or quit one option in order to gain benefits from another.
Now, assume that the customers getting attracted due to ambienceare50 per day. And customers get attracted because of quick food service is 60 per day. Hence if the owner chooses to invest in the ambiance he loses 10(60-50) customers each day. These 10 customers are the â€˜opportunity cost.’
Mathematically, opportunity cost is a predicted calculation. You cannot find out the exact opportunity cost before investing.
What Is Profit Maximization?
Profit maximization is also a part of Microeconomics. It is a strategy used by every business to yield profit as huge as possible.
To put this theory in practice, companies need to decide upon the best output, levels of sales prices, production cost and other influential factors. By adjusting these factors companies determine the profit maximization.
For instance, to gain maximum profit company might raise the sales prices.
There are 2 types of profit maximization
- Marginal Cost â€“ Marginal Revenue Concept
- Total Cost â€“ Total Revenue Concept
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Features of Opportunity Cost and Profit Maximization
Opportunity cost is a valuable strategy to help you make the best use of money. It guides you to make big decisions quickly and effectively without any confusion.
People usually avoid the understanding of opportunity cost while making personal financial decisions. If the underlying structure is sufficiently used in our daily life, potential gains are considerably enjoyed.
Profit maximization is advantageous to industries and small companies. But it shouldnâ€™t become a problem for consumers.
It is highly essential to keep the interests of the consumers in mind while implying profit maximization in the long run.
Use of these theories in important purchases will make a person more cautious towards impulsive spending.
In What Manner Are Homework Sites Helpful
Economics is a vast subject which needs analytical input as well as the understanding of the gist of every topic.For the same, the homework sites are websites which provide Economics experts to solve your core problem in every subject.
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Many times students face difficulty in opportunity cost calculations because there are many different approaches. The experts of Economics teach you methods through which you can easily solve your calculations.
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Homework Help Websites â€“ Pool of Resources
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My Personal Experience
I would like to share my personal experience of my student days. I really hated Mathematics in school. The numbers, equations, and problems seemed to be an alien language to me. But somehow I managed to complete my school with a lower grade in Math.
I pondered upon my inability to excel in Math very often. My inner voice compelled me to take Mathematics in college too. And without a second thought,I opted for Math in higher studies. I came across wonderful Math teachers and resources that made me fall in love with the subject. And astonishingly, I graduated college with distinction.
From this I understood one thing; there is no subject which deserves our hatred. It is our way of learning, our negative emotions which forbid us from looking into the positive side and helpful resources which provide guidance to excel inthe subject.
Similarly, if you are facing challenges and difficulty in doing opportunity cost profit maximization homework (or any topic related to any subject), find out different ways like taking help from homework help sites instead of hating or cursing the subject. You will definitely feel the difference.