Opportunity cost is the cost of any activity measured in terms of the value of the next best alternative forgone (that is not chosen). It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices. The opportunity cost is also the "cost" (as a lost benefit) of the forgone products after making a choice. Opportunity cost is a key concept in economics, and has been described as expressing "the basic relationship between scarcity and choice". The notion of opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently. Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, pleasure or any other benefit that provides utility should also be considered opportunity costs.
Read more about Opportunity Cost: History, Opportunity Costs in Consumption, Opportunity Costs in Production, Non-monetary Opportunity Costs, Evaluation, Criticism
Famous quotes containing the words opportunity and/or cost:
“The wisdom of a learned man cometh by opportunity of leisure: and he that hath little business shall become wise.”
—Apocrypha. Ecclesiasticus, 38:24.
“Keeping accounts, Sir, is of no use when a man is spending his own money, and has nobody to whom he is to account. You won’t eat less beef today, because you have written down what it cost yesterday.”
—Samuel Johnson (1709–1784)