Opportunity cost is
the cost of forgoing the next best alternative when making a decision. It is the value or benefit that is lost or sacrificed when choosing one option over another. Opportunity cost is a crucial concept in economics as it helps to measure the true economic cost of a decision by considering both what is gained and what is given up.
Opportunity cost refers to the loss of potential gain from other alternatives when one alternative is chosen. In other words, it is the value or benefit that you give up by choosing one option over another.
For example, let's say you have $1,000 to invest and you are considering two options: Option A offers a 5% annual return, and Option B offers a 8% annual return. If you invest in Option A, your opportunity cost is the 3% difference in return compared to Option B.
Opportunity cost is not always measured in monetary terms. It can also involve time, effort, or other resources that could have been used for alternative purposes. When making decisions, it is important to consider the potential opportunities you are giving up by choosing a particular option.