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:
“Shears: You mean, you intend to uphold the letter of the law, no matter what it costs?
Colonel Nicholson: Without law, Commander, there is no civilization.
Shears: That’s just my point. Here, there is no civilization.
Colonel Nicholson: Then perhaps we have the opportunity to introduce it.”
—Michael Wilson (1914–1978)
“If music in general is an imitation of history, opera in particular is an imitation of human willfulness; it is rooted in the fact that we not only have feelings but insist upon having them at whatever cost to ourselves.... The quality common to all the great operatic roles, e.g., Don Giovanni, Norma, Lucia, Tristan, Isolde, Brünnhilde, is that each of them is a passionate and willful state of being. In real life they would all be bores, even Don Giovanni.”
—W.H. (Wystan Hugh)