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Opportunity cost

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Opportunity cost refers the cost of something in terms of an opportunity forgone (and the benefits derived from that opportunity) of one investment (of resources, time or money) vs. those benefits which potentially could be derived from an alternative investment. In a small business, this term often is used to describe the potential outcome a company forgoes when choosing to take one course of action vs. another. For example, the "opportunity cost" of a company's decision to open a branch in Neighborhood #1 may be the potential for success a company may have had if it had chosen instead to use that investment to open a branch in Neighborhood #2.

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