What is opportunity cost? Can you give me an example?

Question

Accepted Answer

Opportunity cost is the value of the next best alternative forgone in order to pursue a certain action.

Opportunity cost is a fundamental concept in economics.
It refers to the cost of an alternative that must be forgone in order to pursue a certain action.
For example, if you choose to spend money on a vacation, the opportunity cost is the value of the next best alternative use of that money, such as investing it or paying off debt.
Opportunity cost can also be applied to time, where the cost is the value of the next best alternative use of that time.
Understanding opportunity cost is important in making informed decisions and evaluating trade-offs.

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