The costs of improving

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Forgone option – return on the option we choose As you can see, this is the difference between the possible returns profits from all the options we are considering in a given situation. This assessment can be used to make almost any decision. In the following, we will present some possible examples of application in practice. Examples of opportunity costs Example Mrs. Lidia has capital of PLN , . She would like to spend it on the development of her clothing boutique in the small town in Poland where she lives.
  
She has a dilemma whether to invest in the modernization of her store e.g. replacing traditional lighting with energy-saving ones or start offering her products on the Internet and expand her business to other geographical phone number list areas. Considering the current intensive development of e-commerce and e-commerce, the second option seems more beneficial for her company. Ultimately, by postponing the installation of new lighting, Mrs. Lidia gives up on optimizing costs and achieving specific profits from it.



This is therefore its opportunity cost. Example As a result of staff shortages, company To make a decision, you need to estimate the expected costs of both solutions. The employment of new people involves, among others, with the need to pay remuneration, pay fees for social benefits, equip the future employee with the necessary work tools e.g. computer, business telephone , employee training costs, costs related to advertisements, publication of job offers, remuneration for a recruiter or subcontracting a recruitment agency, etc. It is worth adding that a new employee begins to generate profit for the company after at least months of work. Next, he qualifications of current employees should be determined.