opportunity cost
is the “cost” incurred by not enjoying the benefits associated with the best alternative choice
Opportunity cost is the value of the next best alternative that must be forgone in order to pursue a certain action or decision. It is the cost of something in terms of an opportunity forgone.
In other words, opportunity cost is what you have to give up in order to pursue a certain choice. For instance, if you decide to go to a movie, the opportunity cost may be the money you would have made from working during that same time frame. Or, if you decide to attend a baseball game, the opportunity cost may be the time and money you could have spent doing something else.
From an economic perspective, opportunity cost plays an important role in how people make choices and allocate resources. By weighing the benefits and costs of each choice, people can determine whether the potential benefits of a decision outweigh the potential costs, including the opportunity costs associated with their choice. Understanding opportunity cost can help individuals and businesses make better choices and utilize resources more efficiently.
More Answers:
Master the Basics of Amortization: How to Efficiently Pay Off Long-term Debts through Equal Installments5 Key Factors Driving High Economic Growth: Investment, Innovation, Education, Infrastructure, and Political Stability
Maslow’s Hierarchy of Needs: Understanding Human Motivation and Well-Being.