What are some examples of opportunity costs for firms?

Opportunity costs for firms refer to the potential benefits they forgo when choosing one option over another. For example, if a company decides to invest in new machinery rather than expanding its product line, the lost potential revenue from the unlaunched products represents an opportunity cost. Additionally, if a firm allocates resources to a low-margin project instead of a high-margin one, the difference in profits is another opportunity cost. These costs highlight the importance of strategic decision-making in resource allocation.