Opportunity cost: A review of the literature

Ean Harn Ng, Mario G. Beruvides

Research output: Chapter in Book/Report/Conference proceedingConference contribution

2 Scopus citations

Abstract

The concept of opportunity cost was discussed sporadically in many early economists' writings. Though opportunity cost concept was first proposed by economists, recent studies in opportunity cost are mostly conducted by accounting researchers and engineering economists. Proponents of opportunity cost generally cited that opportunity cost is a valuable decision making criterion, as opportunity cost represents the opportunity forgone in each possible decision. Opponents of opportunity cost often criticize that opportunity cost is not a real cost and cannot be quantified into useful value. The question of the practicality of utilizing opportunity cost by decision makers remains to be answered. This paper first presents the main criticisms of opportunity cost doctrine. Then, an analysis on the characteristics of opportunity cost definitions collected from various research literature is performed. Finally, the implications of the analysis and classifications of the definitions of opportunity cost to engineering management is presented and discussed.

Original languageEnglish
Title of host publication31st Annual National Conference of the American Society for Engineering Management 2010, ASEM 2010
Pages60-67
Number of pages8
StatePublished - 2010
Event31st Annual National Conference of the American Society for Engineering Management 2010, ASEM 2010 - Fayetteville, AR, United States
Duration: Oct 13 2010Oct 16 2010

Publication series

Name31st Annual National Conference of the American Society for Engineering Management 2010, ASEM 2010

Conference

Conference31st Annual National Conference of the American Society for Engineering Management 2010, ASEM 2010
CountryUnited States
CityFayetteville, AR
Period10/13/1010/16/10

Keywords

  • Engineering economics
  • Opportunity cost

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  • Cite this

    Ng, E. H., & Beruvides, M. G. (2010). Opportunity cost: A review of the literature. In 31st Annual National Conference of the American Society for Engineering Management 2010, ASEM 2010 (pp. 60-67). (31st Annual National Conference of the American Society for Engineering Management 2010, ASEM 2010).