What is Opportunity Cost? | From A Business Professor

Description

Opportunity cost is a fundamental concept in economics and business decision-making. It represents the value of the next best alternative that is foregone when making a choice. To illustrate, when businesses or individuals make decisions, they face trade-offs because resources, such as time, money, and labor, are limited. Each decision to allocate these resources in a certain way means that they cannot be used for other purposes. The opportunity cost is the benefit you would have received by taking the alternative action.