opportunitycost
Opportunity cost is the value of the next best alternative that must be forgone as a result of a decision. It arises from scarcity and the fact that resources are limited. The concept encompasses both explicit costs (out-of-pocket payments) and implicit costs (the value of foregone opportunities such as time or wages). The opportunity cost of a choice is the benefit that could have been received from the best alternative use of those resources.
Examples illustrate the idea. A student who spends evenings studying for an exam instead of working a
Measurement and limitations are common challenges. Opportunity costs are not always directly observable and must be
Applications are widespread in personal finance, business decision-making, and public policy. Cost-benefit analyses often incorporate opportunity
Origin: the term is associated with Friedrich von Wieser, who formalized the idea in the late 19th