A business analyst is helping management determine which solution they should choose. As it happens that the organization can only choose one of the two solutions due to time and resource restrictions. Solution A worths $456,000 to the organization while solution B worths $565,000 to the organization. While solution A costs less, it is less risky and takes less time to complete so management elects to seize Solution A. What is the opportunity cost?

Question

Quizplus · Accepted Answer

The opportunity cost is the value of the next best alternative that was not chosen. In this case, the next best alternative is Solution B, which is worth $565,000 to the organization. Therefore, the opportunity cost of choosing Solution A is $565,000 - $456,000 = $109,000.

A Business Analyst Is Helping Management Determine Which Solution They