Productivity decisions in companies

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Diana's Delights, a bakery, can expand its line of cakes or invest in a new line of pastries.

The opportunity cost of expanding the cake line is the potential revenue from the new cake line and vice versa. They estimate that the cake line could attract new customers, but the cakes have a loyal following that could lead to continued growth.

Diana's Delights decides to expand its line of cakes, confident that it is the most reliable source of income .

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Strategic resource allocation
A technology company has a development budget of one million dollars. It can be used to improve existing software or to fund research into a new product.

The opportunity cost of improving existing software is the potential market value of partners email lists the new product. In contrast, the opportunity cost of the new product is the risk of neglecting an established customer base.

After analyzing the market, they decide to improve the existing software, prioritizing immediate customer satisfaction over the uncertainty of a new product.

Higher education pathways
Emma is considering pursuing a master's degree in data science or marketing.

The programs cost the same, but a data science degree has a higher starting salary, averaging $90,000, versus $75,000 in marketing.

Emma estimates the opportunity cost of choosing marketing to be $15,000 in lost potential income per year. However, she feels more passionate about marketing and chooses it, valuing job satisfaction over the pay gap.