Opportunity Costs

Assume that you are the manager of a company that experiences a 50% increase in market demand for its product during the summer months (June through August). One option for meeting this increased demand is to require existing company employees to work overtime for 20 hours per week. A second option is to hire seasonal workers to meet the demand, and the third option is to subcontract the extra production to a competitor.

Post by Day 3 a 250- to 300-word statement that addresses the following:

  • What are the likely opportunity costs associated with each option? Explain your rationale.
  • Based on the principle of increasing opportunity costs, which of the two options would you select and why?
  • Why do you think this option will reduce the opportunity costs more than the other options?

Read a selection of your colleagues’ postings.

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