[Diane_VN20]

I understand the definition of "opportunity cost". However, I've got problem when linking between what I've learned and the practices. Therefore, could you please give me some examples which help me cover this problem? Thank you very much!

[manik chand dey]

In many cases some of the resources, including human, needed for a new project may be a part of the already existing business. Such resources have alternative uses.These alternative uses create opportunity cost-that is the cost for the existing business due to the new project.

For example some executives may be transferred to provide services to the new project.Is it cost free? Obviously not. The project has to be charged for these.As the business has transferred its executives to the new project, hence these executives had to be replaced by suitable personnels, for which the business has to incur an additional salary of Rs 1 lakh (say).
Hence we can easily say the opportunity cost for the replaced executives is Rs 1lakh.

Similarly cost may be attached to other resources like buildings, plant, vehicles etc. based on the next best use or expenses incurred.

In real life situations it may be difficult to attach opportunity cost to all resources, especially those which do not have an alternative use.