What is the Law on Raising the Cost of Opportunity?

The Act on Raising Opportunity is a concept that is often used in business and economic circles. In essence, this law states that other units of goods are produced, the costs of the opportunity associated with this production will also increase. Understanding this phenomenon can help businesses to determine whether to decide to increase production is worth effort, or whether rising costs for opportunity means that the benefits they do are sufficiently reduced to deserve to maintain lower level production.

In order to understand this law, it is important to first define what is according to the cost of the opportunity. This is sometimes referred to as the above production, which means that in order to select one strategy or method of good production, the resources must be diverted from the production of other goods. The cost of the opportunity represents what can be obtained by these resources in a different way and how this use was finally generated in comparison with the benefits of the darkness that was selected.

One way to understand how the Law on Raising Costs is to consider a farmer who decides how to allocate the platforms of agricultural land to the growth of two crops. Rather than allocate the available soil evenly, the farmers decide to plant 70% of the soil in corn and reserves the rest for soybeans. Although maize production increases due to the allocation of other sources to this effort, this may cause the cost of soybean production to reduce the soil, due to the reduced return on the company, which includes a number of solid expenses. At this point, the farmer will have to find out whether the benefits of increasing more maize balance the increased costs of increasing less soybean beans, and then adjust the allocation of resources as needed to create the most desired end.

General concept can be used in many ways. Businesses can use this in planning production quotasof different products. The department can use this idea to allocate resources for various projects. Even small businesses can take into account the Law to Raise Costs on Opportunities or Assign Time to Certain Types of Back Office functions when designing displays and layout of shopping area. With regard to this concept, it is often much easier to reach an action plan that ensures the greatest benefit and maintains losses under control.