1.5.5 Business Choices Flashcards Preview

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Flashcards in 1.5.5 Business Choices Deck (4)
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1
Q

Opportunity cost definition

A

The benefit of the next best alternative that is missed out on when making a decision
E.g. opportunity cost of spending £1 on a coke- spend £1 of a can of Fanta instead of a £1 bar of chocolate

2
Q

some of the benefits a business could sacrifice by choosing a different option

A

could have:

  • strengthened the brand name
  • extended the product life cycle
  • bought in lots of revenue
  • increased market share
3
Q

choices and trade-offs

A

when a business makes a choice they face and trade-off
e.g. a business may have to decide between spending on training for staff to improve customer service or investing in an advertising campaign to attract new customers

4
Q

trade-off definition

A

where a business has to make a choice between 2 options, gaining less of the option they don’t choose. A trade off creates an opportunity cost.

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