Answer:
$125,000.
Explanation:
The opportunity cost is the cost of the alternative forgone.
This is also known as the real cost. Due to the limited resources available to meet unlimited wants, choices have to be made with some alternatives left unsatisfied.
Such unsatisfied wants are the real cost of the wants satisfied.
Hence in this case, the amount that would have been received if the machine was sold and no chocolates were produced is the opportunity cost for producing chocolates.
Answer:
Opportunity cost is $125,000
Explanation:
Opportunity cost is defined as the forgone alternative of taking a particular action, it is opportunity lost when an individual decides to use resources for an activity.
There are two types of cost in economics, the cost of doing a particular activity and the foregone alternative. So for example if a person decides to buy a shirt, the economist does not only consider the cost of the shirt but also what the money could have been used to buy instead of the shirt.
If a person goes out with his friends the opportunity cost could be the wages he would have earned working in the office.
In this instance the machine can be used for production and as a result gain contributing margin of $100,000 from sales.
The opportunity cost is the money the company would have made by selling the machine, that is $125,000
