opportunity cost
the most desirable alternative given up as the result of a decision
Opportunity cost is an economic concept that refers to the cost of an opportunity forgone or sacrificed in order to pursue another opportunity. It represents the benefits that could have been gained by choosing the next best alternative. In other words, opportunity cost is the value of the next best alternative that is foregone when making a decision.
For instance, suppose a person has a limited budget and is trying to decide between two options: buying a new laptop or going on a vacation. The cost of buying a new laptop is $1000, while the cost of the vacation is $1500. If the person decides to buy a laptop, the opportunity cost of this decision would be the benefits of the vacation that were foregone, which could be relaxation, sightseeing, and spending time with family and friends. On the other hand, if the person decides to go on the vacation, the opportunity cost of this decision would be the benefits of the new laptop that were foregone, such as improved productivity, access to new technology, and better performance.
Opportunity cost is an important concept in decision making, especially in economics, business, and finance. It helps individuals and organizations to make informed decisions by comparing the benefits and costs of different options and choosing the one that provides the highest net benefit.
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