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:
“As death, when we come to consider it closely, is the true goal of our existence, I have formed during the last few years such close relations with this best and truest friend of mankind, that his image is not only no longer terrifying to me, but is indeed very soothing and consoling! And I thank my God for graciously granting me the opportunity ... of learning that death is the key which unlocks the door to our true happiness.”
—Wolfgang Amadeus Mozart (1756–1791)
“It breedeth no small offence and scandal to see and consider upon the one part the curiosity and cost bestowed by all sorts of men upon their private houses; and on the other part the unclean and negligent order and spare keeping of the houses of prayer by permitting open decays and ruins of coverings of walls and windows, and by appointing unmeet and unseemly tables with foul cloths for the communion of the sacrament.”
—Elizabeth I (1533–1603)