1.5.5

Question 1

Opportunity cost

Answer 1

What is given up when you choose one option over another.

E.g a business has £1 million to invest. They have two options, they can either use the money to expand their existing product line or invest in new technology.

If they choose to expand their product line, the opportunity cost is the potential profits and market share they could have gained from choosing to invest in the new technology.

Question 2

Importance of opportunity cost?

Answer 2

The point of opportunity cost is to help decision makers assess the full implications of their choices

Question 3

Trade offs

Answer 3

Gaining something desirable means sacrificing something else

Question 4

Choices entrepreneurs face

Answer 4

1) Quitting there job to start their own business

2) choosing a business idea

3) deciding on funding sources