Demonstrating opportunity cost is done through production

O analysis.

possibility.

calculation.

research.

Answer: 3. calculation.

Calculation is the tool that exhibits opportunity cost. Opportunity cost is the key term representing possible gain that someone including an individual, company or society forgoes in choosing between one alternative over another. It is a measure of an opportunity cost in economic decision making.

To show the concept of opportunity cost, one can find out its value when calculating how much second best allows suspending or must be abandoned. For instance, if you invest $10,000 in stocks and the return produced by such investment is 3%, then opportunity cost here would be this amount of start that could have been generated on a bond sides. Alternatively, if you devote an hour to study each day your opportunity cost would be calculated as the hourly wage rate that is lost by opting not work for one-hour. Opportunity costs can be calculated in numerical values and by finding the results of payoffs that would have resulted from different choices, you are able to compare opportunity costs quantitatively for better informed decisions based on allocation given limited resources . While the exact calculations will change depending on situations, the idea of comparing and measuring various tradeoffs is essential to opportunity cost analysis.