AI reviewed · sources pending. Book associations have not been verified.
Opportunity cost
ConceptThe opportunity cost of a choice is the value of its next-best forgone alternative.
Explanation or usage
Scarce resources can serve competing purposes. The relevant comparison is what the decision maker gives up by choosing one use over the best available alternative. Opportunity cost can exist even when no money changes hands.
Common misunderstandings
Opportunity cost is the sum of every imaginable alternative.
In Economics in One Lesson
General context reviewed · book attribution and sources pending
A useful lens for analyzing policy is to compare visible benefits with alternative uses of the same resources.