Decisions on the growth of a company

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A company has $200,000 that it can spend on marketing campaigns to increase its customer base or expand its product offering.

The opportunity cost of marketing is the potential revenue from a new product line, while the opportunity cost of product expansion is reaching a larger audience through marketing.

After conducting a market study, they decide to invest in the new product, betting that it would attract a wider audience.

Family financial compensations
The Martins are deciding between buying a bigger house or saving for their children's college education.

The opportunity cost of buying a larger home is the compound growth of your college fund. In partners email lists contrast, the opportunity cost of prioritizing college savings is the comfort and space you would gain from a larger home.

After discussing their long-term goals, they decide to put more toward college savings, valuing their children's education more than the extra space.

Strategic planning of the company
A company may focus on expanding its operations internationally or improving its position in the domestic market.

The opportunity cost of international expansion is the resources and potential lost profits from improving domestic operations, while the opportunity cost of focusing on the domestic market is the potential growth of an international market.

Ultimately, the company analyzes market trends and decides to focus on the domestic market, believing it has a greater competitive advantage .

Read also: Top 10 Budget Templates to Evaluate and Disclose Costs

Real estate decisions
John owns a plot of land in a rapidly developing area. He could build a small apartment complex or sell the land to a commercial developer.

If you build the apartments, the opportunity cost is the immediate money from the sale, avoiding the risks of construction. However, if you sell them, the opportunity cost is the potential rental income.

After reviewing property forecasts, John decides to sell, choosing the security of immediate funds over long-term property management.