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| What Is Opportunity Cost? | Theory of Microeconomics | Know all about it |
Opportunity Cost
Opportunity cost in economics refers to the value of the next best alternative that is foregone when a choice is made.
In other words, it is the cost of not choosing the second-best option.
Example:
Imagine you have ₹100 and two choices:
- You can buy a book for ₹100.
- You can watch a movie with that ₹100.
If you choose to buy the book, the opportunity cost is the movie you didn’t watch. Similarly, if you choose to watch the movie, the opportunity cost is the book you didn’t buy. It’s the benefit you miss out on by not choosing the alternative.
Note: No, opportunity cost does not only refer to money. It includes the value of any foregone benefit this can be time, effort, enjoyment, or other resources.
