Opportunity Cost College Essays Samples For Students

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Problem 1
Opportunity Cost
- Define the term “Opportunity Cost”
Opportunity cost is the value of the foregone mutually exclusive alternatives. When choice are to be made between several mutually exclusive alternatives in terms of decision making, opportunity cost is the value of alternative that is forgone due to selection of some other alternatives. Generally, opportunity cost is the value of next best alternative that can be achieved with same input. For example: George had $2 in his pocket which is enough to buy either a cup of tea or a cup of coffee. Among ...

International Business

International Business
For this assignment, refer to the tables and answer the questions in one or two paragraphs each. Respond to both parts one and two in the same document.

1. Referring to Table 1, what can be concluded about Spain’s absolute and comparative advantage for both boats and trucks?
Analyzing the given Table 1, Spain seems to have an absolute advantage compared to that of Portugal in both the commodities. This implies that Spain is better at producing both boats and trucks more efficiently than Portugal. Spain will need less input to produce the given level of ...

Introduction

Whenever a person makes a purchase, he gets a feeling of joy or happiness from the purchase. This is known as consumer satisfaction. Consumer satisfaction is a term used in Marketing to define the level of satisfaction that a person derives from consumption or use of a product. Often a person goes without one product in order to purchase another. An example of such a purchase would be a woman foregoing a new dress in favour or school books for her child. This is called the opportunity cost of the books. It measures the dissatisfaction of not having the dress as against the satisfaction of providing for her child. ( ...

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Introduction

The main perspective of this assignment is to analyze the two different jobs from different standpoints in total. Obviously, it is important to consider the things effectively and move with a perfect pace. In the next section, we will start the conversation with financial analysis, opportunity analysis, their linkage and then the personal finance comprehensively. The two jobs which have been selected for the same purpose are Financial Analyst and Opportunity Cost Analyst and different provisions would have been taken into account to complete this particular job in a perfect manner.

Main Body

Education
At ...

Economics is a subject that is used in different phases of life, and it is one of the most important subjects. The basic definition of economics stride upon the fact that how to earn the money and how to consume it accordingly. Authors identified and described these particular concepts under the umbrella of two important things, which particularly are microeconomics and macroeconomics. Microeconomics is a form of economics that relates to the branch of economics of individuals. Macroeconomics is the second thing which analyzes the economics related to the country as a whole or mass marketing.
The concepts of economics vary ...

Comparative advantage refers to the ability of one entity to produce goods and services at a lower opportunity cost than its competitors in the same industry. Under the concept, the entity decides to specialize in production of a given product based on the opportunity cost rather than the efficiency of production of the same product (Hunt, Shelby and Morgan 239).
For instance, assume that both Hungary and Denmark can produce either eggs or milk on the international market, but not both. If Hungary can produce 20 units of eggs or 10 units of milk. The opportunity cost of each ...

When making procurement decisions, the opportunity cost must be evaluated. Resources are scarce while human needs are unlimited. Economists continue to face the problem of scarcity and choice. One thing is bought at the expense of another. Since resources are limited and needs are unlimited, persons habitually purchase products that will give them the maximum value. Opportunity cost is the loss of probable gain from the 2nd best forfeited alternative when one alternative is picked. For example, one has $9500 which they can use to buy a bungalow or a Prado as those needs are at the topmost of his priority ...

It is vital for a country or individual to apply the concept of Economics on its economic consequences. The basic definition of Economics has been presented by two of the great authors of their time named Alfred Marshal and Adam Smith. According to the concepts of these authors, Economics is the name of how to earn the money and how to consume it.
There are two different types of economics, which particularly are Microeconomics and Macroeconomics and both of the branches have their own recognition and importance. Opportunity cost is one of the most important economic concepts which would ...

Definition

Opportunity cost is the choice of the alternative good or services against the other based on cost and benefit. There is always a trade-off in opportunity cost as resources are limited and they are used in various ways.

Examples

Suppose a person is thinking of riding a bus and not driving his own car. If he is riding the bus then he is travelling more cheaply but not as comfortably like his own car. So, some cost travelling by bus are waiting for the bus, walking to the bus stop and a slow journey. If the choice is between travelling ...

The relevant context of this case is the opportunity cost of economic stability to that of the cost of war. Critics of the war have argued that if the United States had opted not to take part in the war, their economy would have continued to perform very well. The critics of the war have given several reasons to justify their claims. The assumptions below explain some of the reasons given to explain the adverse effects of war against Iraq.
One of the reasons that have been given to explain how the war on Iraq affected the America ...

Limited resources dictate the need to choose the optimum production values and the production process, based on the principles of a combination of factors, taking into account the substitution effect of the scale of production and the law of declining productivity. Every society, every economic agent tends to use resources effectively. They try to get the maximum amount of goods and services produced from limited resources. To achieve this objective, the company must make full use (completely take) their resources and thus ensure getting the most possible output.
The most possible volume of production provided an effective allocation of ...

M1, DQ1:

a) When making this comment Friedman implied that any decision is bound to have its costs along with the benefits. Even if the costs cannot be measured in monetary terms, they always exist as a cost of the opportunity forgone in favor of the chosen option. Putting it in simple terms, selecting a menu for lunch would cost you the pleasure of trying other dishes, even if the meal itself comes “for free”.

b) When planning a career, one always faces a choice between getting education and starting to work earlier. Having applied to college, I realized that this decision carried the opportunity cost of ...

Suppose that there are two products: clothing and soda. Both Brazil and the United States produce each product. Brazil can produce 100,000 units of clothing per year and 50,000 cans of soda. The United States can produce 65,000 units of clothing per year and 250,000 cans of soda. Assume that costs remain constant. For this example, assume that the production possibility frontier (PPF) is a straight line for each country because no other data points are available or provided. Include a PPF graph for each country in your paper.

What would be the production possibility frontiers for Brazil and the United States?

Without trade, the United States produces ...

Question 1: Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class?
Opportunity cost refers to the cost of a lost opportunity when one decides to forego it. Essentially, it denotes the benefit that one will lose from choosing one alternative over the other. The opportunity cost of attending college will be the income I would have earned from being formally employed or being an entrepreneur. The opportunity cost of coming to class is the fun that I would from going to a recreational park or a movie or ...

Introduction

This paper explores the various forms of economic systems and their methods of allocating resources. Economic resource allocation seeks to achieve economic efficiency in all dimensions of resource allocation among the various economic actors within any economic set up. The major focus will mainly entail the command economy as well as the market system of economy. A market system of economy, normally known as capitalism or free economy is a system of resource allocation in which the factors of production are allowed to move freely, the economy is allowed to operate freely without intervention from the central governments. It is ...

YOURNAMEHERE

YOURSCHOOLHERE
C13 Economics Assignment 08 Part 1
Monopolies develop in several ways (Vandewetering, n.d.). There are “natural” monopolies that emerge from the scales of some businesses. Electric generation utilities, for example, require multi-million dollar investments in the plant and more millions to build the distribution infrastructure. At these levels of entry costs, virtually no competition can develop. Some monopolies develop around ownership of a scarce resource. The DeBeers company, for example, controls a large percentage of the world’s supply of diamonds.
The third form of monopoly is the result of government action. For example, patent and copyright protection ...

Introduction

Report’s aim
Comprehensive analysis of a company is crucial for decision making regarding its inclusion in a portfolio. That requires forecasting a company’s performance to estimate the expected value of the stock and comparing it with the current market price so as to decide whether it is overvalued or undervalued. In that view, this analysis seeks to analyze the IMB Company with application of the Discounted Cash Flows method as well as WACC. With the values calculated, the value per share is compared with the current market price to make recommendations whether the stock is a buy, ...

We make financial decisions based on the role of scarcity virtually every day. Upon taking this precious course in Microeconomics, I am interested in developing a sound understanding of personal finance, especially understanding and applying the economic rule of opportunity cost to my personal investment plan. I suppose that this principal rule is the most essential for everyone, a student or an employee alike.
The rule of opportunity cost regards all the money we spend in different things and services that undoubtedly affect our financial wellbeing. To have a satisfactory financial balance, grownups need to think critically before investing ...

Introduction

Many companies expand their operations through capital projects. Capital budgeting decisions are critical since capital projects involve a substantial outlay of financial resources. In addition, most of these projects are irreversible. It follows that a company must exercise due diligence in evaluating a proposed capital project before deciding to accept or refuse the proposal. Correct estimation of expected cash flows from the project is key to the sound evaluation of the viability of the project and hence an appropriate capital budgeting decision. This paper explores the costs and items included in the determination of cash flows expected from a project to manufacture golf ...

Introduction

Comparative advantage is a fundamental principle of economics that considers a situation where a country is able to produce a certain product at a lower opportunity cost than the other country. An opportunity cost is referred to a cost incurred when doing one thing instead of another. For example, the opportunity cost of producing wine is foregoing the production of producing cheese.

Assumptions

- The Ricardian model is based on the following assumptions
- Two countries and two goods are involved in the trading activities
- The only factor of production is labor and the market structure is the perfect competition which brings about ...

HOW PUBLIC SECTOR WORKS.

Economics actors can be defined as the participants in the economy sector of a country that influences decisions in the economy often to do with allocation of resources and other decision making areas.
Public sector is a one of the major economic actors in every economy, in many countries it has been seen to contribute an average of 50% of gross domestic product of. An effective working public sector encourages a lot of growth in the economy since it provides an environment that is conducive for all economic activities to be carried out efficiently and effective (Gregory, 2010). Besides the public ...

In economics, scarcity simply refers to the limited nature of economic resources and as such consumers have to make choices as to what they can acquire with their limited resources and what they can forego. When the consumer makes the decision to acquire a good or service at the expense of another good or service that he also needed but could not acquire both due to limited resources, the foregone choice is referred to as opportunity cost (Frank and Bernanke). In our everyday life, these economic concepts are practiced both micro-economically and macro-economically. Personally, like so many other consumers, ...

Answer 1)

a) Yes, United States has an absolute advantage in production of wheat and beef. Absolute advantage takes place when one country can produce more of a good than the other country. Thus, since US can produce more wheat and beef than Argentina, it surely have an absolute advantage in the production of wheat and beef.
b) In US, the tradeoff between wheat and beef is 1/3rd of beef for every 1 unit of wheat. Thus, to produce one extra unit of wheat, US must forgo producing 1/3rd unit of a beef. Similarly, in Argentina, the opportunity cost of producing wheat is 1 ...

In every economic scenario, productive resources are limited hence people cannot acquire all the services and goods they desire. This means that choices have to be made and whenever a choice is made, something has to be foregone. The opportunity cost of a chosen item is the value of the best alternative forgone. The evaluation of opportunity costs and choices is subjective meaning that such evaluations differ across societies and individuals. Subjectivity enters into the calculation of opportunity cost using the concept of persuasion whereby an individual will be influenced to make certain choices by making opportunity costs unambiguous by appearing ...

Education is one of the basic commodities that ensure good life in the world. Provision of education has been made by many countries in the world since this is one of the factors that help in improving the future productivity of a country. With no education, there would be no effective production in the major sectors of the economy of a country. Education in Australia has been divided into various sub sectors which give education to various citizens at various levels (Harrington 2010). Although the education level in this country has been good, some of the economic analysts argue that the ...

In the second half of the 20th century, Japan rose from a small defeated nation to a commercial powerhouse second to the United States. Several factors contributed to its success and the entire economic power attached to it at that time. It is exceptionally transitional to see upcountry take advantage of war situations between struggling economies to rise to an excellent economy like Japan did. The war situation between the United States and Russia became a norm rather than an exception to Japan in terms of economic benefits (Palan, 2000, p. 106). It was not entirely based on the culture of the ...

Introduction

There exist multiple factors that influence the level of reward paid to different workers. The wage rates, just like prices of other commodities are greatly determined by the forces of demand and supply. The kind of economic significance attached to wage differentials cannot be overlooked since they have a direct influence on the distribution and allocation of economic resources. Workers with equal abilities in a competitive market receive rewards that are meant to cancel out the non-wage differences between their jobs. These differentials represent the variability and diversity of abilities of different workers both physically and mentally to contribute ...

ASSIGNMENT 1

Introduction
This paper consists of three parts. Part 1 includes the evaluation of two investment projects for a car manufacturer Chrysler Ford using the key five capital budgeting techniques. These include payback period, discounted payback period, net present value, internal rate of return, and modified internal rate of return. As a result of application of these investment appraisal methods, the projects that would lead to the maximization of the stockholders wealth were identified.
Part 2 represents a critical appraisal of the given techniques for making capital budgeting decisions. It is explained why discounted cash flow methods are preferable to ...

Interest rates are pro-cyclical. They rise during expansions or economic booms and fall during recessions or economic contractions. Federal discounting promotes the pro-cyclical movement in money supply to an economy because the spread between the discount rate and the market interest rates rises when there is expansion and declines when there is recession.
In case the interest rates rise during an expansion, it follows that the desired excess reserve amount decreases when there is an expansion. The FED increases interest rates when businesses are experiencing growth in order to steam off inflation. Alternatively, the FED decreases the interest rates ...

Q1.
Essentially, the opportunity cost is what someone is giving up to get an item. Investopedia (2016) defines it as the “cost of an alternative that must be forgone in order to pursue a certain action”, alternatively, the benefits the one might enjoy if chosen another option.
a) Hence, the opportunity costs of attending a college, assuming this is a full-time education, is not being able to take a job and earn money immediately, again, assuming the inability to take a part-time job. This also means lack of job experience. In addition, the opportunity cost of this option is ...

Part 1:

There are several benefits associated with higher education. In the competitive global era, it increases the chance of employability of an individual i.e. an individual having the advanced university degree will have higher chance of being employed. Pursuing a higher education, the student gets the opportunity to explore new horizons, which go undiscovered with an ordinary graduation degree. The degree also acts as an addition to the value of individual’s profile. The MBA (Master of Business Administration) from a recognized institution helps to qualify for better placement assistance. Additionally, it will elevate the individual’s level on the ladder of ...

In economics, opportunity cost is the cost of the alternative that is foregone in the favor of another. The opportunity cost arises when a choice requires to be made between two available ones. In this sense, it refers to the benefits that one could have accrued had he chosen an alternative action.
Opportunity costs are subjective in nature. This means that only the person in possession of two alternatives can choose the most attractive from a personal perspective or from a given point of view. Human beings have different aims of philosophy and life and because of this, each has different ...

Question One

In coining the theory of plant location, Weber made three simplifying assumptions. One of the assumptions was that there was a fixed center of consumption. Secondly, Weber assumed that although the distribution of raw material deposits around the globe was uneven, the cost was the same. Thirdly, Weber assumed that the centers of supply of labor are fixed and the supply of labor at a cost is unlimited. Unlike Weber’s theory that considers two factors, transportation and labor cost, the spatial margin profitability considers more factors like taxes, convenience for customers and area costs. The location of heavy industry in ...

- Housing costs me nothing.
This statement is not correct from the microeconomic point of view. There is always an opportunity cost, which is always born by the person who asks the question. Sale of the house or rent of the flat while moving into a cheaper housing would provide quantification of such cost when compared to actual level of income. Also, there are maintenance costs and tax related costs.
- Boring lessons.
The financial cost of the lessons was already covered, from the microeconomic point of view, if the lessons are useless, participation will only increase ...

- Describe briefly the legal rights and privileges of common stockholders.
Common shareholders ownership is considered to be residual. That implies that common shareholders can claim firm’s earning only after those of government, debt holders, and preferred shareholders have been met. They are considered to be a true owner of the company or the corporation. By virtue of being the true owners, they possess dividend rights, assets rights, voting rights, and pre-emptive rights.
Going into further details , the common shareholders have the legal right to elect it board’s directors. The board in turn decides and elects ...

Introduction

I agree that Standard Costing and Variance Analysis are vital and crucial for any kind of business. I will support this position by showing the importance of standard costing and variance analysis for businesses. In light of this statement, I will also show that standard costing and variance analysis are as important to small businesses as they are to large organizations. Variance analysis is the comparison of standard costs and actual costs hence it is important for any type of organization. This is because controlling costs helps in identifying ways in which costs can be controlled thus enhancing efficiency ...

Business and the Economy

Introduction
Extending an already flourishing business to a new set of customer can be a very tricky affair. It is even trickier in the world of fashion where image is everything in the business. While one could be lured by the prospects of a bigger and even more profitable market, one can incur significant losses because of mismanagement of the new brand or image thereby impacting negatively on the existing and established brand or image (Moor, 2007, pp.143). This will result in the unprecedented exodus of clients thereby affecting the sales volumes of the brand. On the other hand, the effective ...

OPERATIONS MANAGEMENT

Introduction

Since time immemorial, the management of operations in a firm has always been a source of concern by firms. Generally, an operation refers to any method, process, or even a series of activities practiced in practical nature. The definition encompasses all the human activities in a firm. Operation management can be termed an aspect of efficient management of any operations. Individuals refer to operations and production as being two different aspects of an entity. However, all operations can be termed as collective and therefore are of concern to every individual in a firm. To this end, this paper aims at reviewing literature on ...

Opportunity cost is the next best alternative to the one chosen (Daly, 2010). The process of evaluating the opportunity cost and trade-offs between alternatives, and making a final purchase decision explains a few economic principles of Mankiw. Assuming that there are two concerts in town, ‘Hot Stuff’ and ‘Good Times Band’ and I need to decide which concert to attend. It is a trade-off that people often face in their daily lives. Once faced, the alternative needs to be evaluated thoroughly. Cost of something is the benefit that one has to forgo to get something. In this scenario, the ticket price is $ ...

Short Term Benefits

1. Microeconomics and macroeconomics both utilize different scales for managing the economy. Microeconomics deals with how everyday companies and families interact with the market to set a balance between the demand and supply price. Macro economics on the other hand deals with the bigger picture of economic activities. It includes the components of taxes, unemployment, economic growth and inflation. Macroeconomics deals with laying policies in which the micro system functions. The areas of concern in this branch include management of the numerous individual economic units which can be very complicated and contradictory considering the varied interest of each microeconomic firm. ...

1. Explain the meaning of Globalization in its different aspects. What is ‘comparative advantage’? What is the difference between “comparative advantage” and “absolute advantage”?
Globalization is a term that often refers to the interconnectedness of the resources and goods, which belong to different economies and countries. It sets the goal of unification, reduction of trade barriers, international specialization and trade, based on efficiency and intensified communication and transportation.
Comparative advantage in the international trade is related to the opportunity cost for a country of producing a good. A country would specialize in producing a good, if it has lower ...

(A)Principles of increasing/diminishing marginal returns.
Principles of economics include returns to scale. Most firms experience increasing returns to scale when at the beginning of the business the costs in the long-run are decreasing this is so because a unit of the available resources produces more returns. On the other hand decreasing returns to scale in most cases occurs when the unit resources produce fewer returns. Organic products on the article exhibit increasing returns to scale, (Arthur, 2003). From the article companies such as wall-mart improved and became big firms this helped them to scale up, and make high ...

Abstract

Market structure refers to the interaction between various buyers and sellers. Different market structures have different characteristics. The characteristics of the market structure determine the realized outcomes. There are three main market structure: perfect competition, oligopoly, and monopoly. Perfect competition has many sellers. Therefore, they do not have any market power. They cannot influence market outcomes. An oligopoly has few firms with some market power. They can influence the outcomes. Monopoly comprises of only one firm with absolute market power. Therefore, it can influence the realized outcomes. This paper highlights the characteristics of the various market structures. It then ...

Abstract

The mainstream economic theory holds that globalization is beneficial for every country, both developing and developed. However, the mainstream view relies on the comparative advantage theory, which embraces many unrealistic assumptions such as free mobility of labor and sustainable trade. These assumptions lead to adverse effects to countries that adopt globalization without a strategic plan. Importantly the U.S. is experiencing loss of jobs, an imbalance in income distribution and unfair competition due to globalization. These impacts arise when companies shift their production process to cheap labor zones and due to increased demand for skilled labor.
This paper has four ...

Among the top 10 goods or services that are imported into the United States, electronic equipment rank the highest with phone and system devices topping the list. Electronic equipment makes up 14% of the total US imports and is therefore in very high demand in the US market. At the same time, Japan oil imports form 23.3% of their total imports (Ackerman, Ishikawa, & Suga, 2007).
The concepts of absolute and comparative advantage in international trade dictate how countries utilize scarce resources to produce goods or services. It is not economically viable for the United States to produce all the ...

Production of goods and services is one of the core and fundamental aspects that relates to companies and organization. Organizations aim at making profit and this would only be achieved through proper production of goods and services. It is the wish of every organization to produce as much as possible in order to meet the demand that exist in the market but several factors act as obstacles to wards this. One of the major things that deter effective production is the scarcity of resources for production such as raw materials that are essential for the production process. When we ...

Question and Answers

Chapter 8
Question 1
Comparative advantage is the ability of a person, firm or country to produce a good at a lower price than the market competitors. This enables the producer to sell the goods at a lower price than its rivals, all the while making a more profit.

Question 2

Question 3
Laypeople tend to think that trade is mostly about goods whereas economists consider many other factors
Gains are often stealth for economists
Economists view trade as having distributional effects.
Economists consider opportunity cost as being relative unlike laypeople
Question 4
Trade affects the distribution of income by widening ...

The study of Health Economics encompasses the application of several tools of microeconomics like demand, and the theory of cost regarding health issues (Santerre & Neun, 2009). However, the main objective of studying health economics is to encourage proper understanding of the various economic aspects of health care issues. Therefore, the analysis of microeconomic knowledge is important while conducting a thorough economic healthcare study. Consequently, the management of the hospital should not worry if they lack some macroeconomic backgrounds regarding the provision of healthcare facilities. The paper assists Sunnydale in applying some theories of microeconomic concerning health economic issues; hence, ...

Hot financial stuff

There is a myriad of financial considerations highlighted in this case. They include treatment of technical and market research costs of the product line, incorporating effects of new product line on the old product line, as well as the determination of the residual and economic values of an investment. The required rate of return is also highlighted in this case. Felipe Mendez requires a minimum return of 25% on any investment he makes.
R&D
R&D is an expense incurred in the development of new products. R&D should be computed and expensed off in the firm’s income statement in ...

In life people make critical decisions that define them, their personality, ego and integrity. Such decisions are subject of opportunity cost and trade off between maintenance of status quo and choosing an idea that leaves footprints in generations to come. After finishing my o-level, I felt the need to develop the spirit of intellectualism in me, this idea came to me after proper meditation and value addition in my mental faculty developed the thirst to be great philosopher who can prudently gather information, who can be precise in arguementation,fair-minded in reasoning and unbiased in criteria. In addition, I ...

Introduction

In any negotiation process, there are always constraints involved and decision making process involves an analysis of the gains and tradeoffs one has to go through to reach the best optimal solution.

Decision making process is not just a psychological process as perceived by many but more of a game theory because both the bidder and the negotiator are faced by various constraints, which both have to develop a model with both constraints and targets and later iterate to obtain an optimum solution.
Here, again, BATNA (best alternative to a negotiated agreement) comes into play; both parties must go for a sacrifice. None ...

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Introduction

The concept of corporate finance lies in time value of money and is often regarded as the foundation of the corporate strategy as well as the financial management. The concept of net present value is applied in a number of financial decisions and the time value of money is dependent on the same principle. Therefore, this paper will be focused on the importance of the time value of money based on the concept of net present value. This concept is clarified by using the example of bond valuation as mentioned in the question. However, this paper is ...

A common belief in business states‘ the structural decision items of an operation's strategy are a reflection of the hardware components of the firm, while the infrastructure decision consequently, represents the firm’s software’. This is an analogy borrowed from computers that reflect on how important structural decisions are to the firm. Hardware is the backbone without which software would have nothing to run. There are heavy investment decisions that cannot be changed without incurring significant losses. They demand deliberate considerations about operations spread in different countries and demographics (Kayne, 2009). They include facilities decisions, process technology, capacity management and ...

Introduction/Summary

As per the article by Bernard Siegel, the decisions to whether to buy a health insurance or not have been the subject of debate among people. Here, affordability is said to play a vital making choices. As such, many young people tend to weigh their budgets against the risks involved. The risks (chance of incurring medical costs of at least $ 27000 by 2011) attributed to the young people (25-34 years) is estimated to be about 5%. About 6 million people are anticipated to pay the penalty for not buying a health insurance policy, which will increase proportionately with an individual’s adjusted ...

Identifying and Managing Risk

Introduction
Risk management is a very important technique in business, and virtually all spheres of life. Through risk management, one is able to identify, assess and prioritize risks. From the results of this, then one is able ti implement a coordinated and economical usage of resources in order to monitor, control and minimize the impact and probability of any unfortunate events and to capitalize on the realization of opportunities. This is the gist of many articles by Dr. James Kallman, a guru in risk management. This paper will compare and evaluate risk management techniques proposed by Dr. James Kallman and those ...

[John McLane] insert your name here
[Wharton University] insert your university here
The article on Timothy Taylor’s blog addresses the issue of opportunity costs – the costs of alternative option given up in order to make some action. The author argues that opportunity costs can appear large or small, depending on their “framing”, i.e. comparing those costs with the value of goods or services.
The examples provided in the article show that while the opportunity cost in itself is just an abstract sum of money, it gains real value when stated in terms of the things ...

Capital Budgeting

Answer 1)
Change in Interest Rates:
No, finance costs related to one particular project, should not be considered while estimating the incremental cash flows of the project. Hence, all the expenses related to financing, i.e. interest expenses should be ignored. Important to note, if the manufacturer wishes to include debt financing, the cost of the same shall be reflected in the cost of capital/discount rate that is used to discount the cash flows calculated.

Answer 2)

Sunk Cost
The cost of studying the golf clubs will be categorized as sunk costs and hence, this cost will not be ...

Shampoo is not a specialty product and so there is a lot of variety available to the customers to choose between different shampoo products. In addition, they also have lots of resources due to which they can make the purchase when and where they want. There is no hidden information and thus the consumers usually prefer the cheaper products but the opportunity cost is also considered. The most significant factors contributing to the opportunity cost include the time spent on shopping, convenience of the retailer location, and even the time spent on gaining information regarding the quality of the brand. Mostly, ...

Question 1

Finance management is significant in the making of critical decisions such as investments, capital budgeting and dividend policy decisions. The finance manager uses the financial statements provided by the accountants to make decisions that may positively influence the performance of a corporation. Based on knowledge and information provided to the finance management, the finance manager can be able to select assets, which the firm can invest. Additionally, with the finance knowledge the, finance manager can be able to conduct capital budgeting effectively. Capital budgeting relates to selection of assets that will provide long term benefits to firm. In the selection ...

PART 1

Question 1
If the price elasticity of demand for firm X’s product is -1.75, lowering its price will result in an increase in total revenue. This is because a negative price elasticity of demand implies an inverse relationship between price and quantity demanded. It indicates that an increase in price leads to a decline in quantity demanded and a decline in price leads to an increase in quantity demanded. In addition, the price elasticity of demand is more than 1 in absolute terms hence a change in price leads to a more than proportionate change in quantity demanded. A 1% decrease in ...