an opportunity cost is

An opportunity cost is the value of the best alternative you give up when you choose one option over another. In other words, it is the benefit you could have enjoyed from the next‑best choice that you did not take.

Core idea

• Opportunity cost arises because resources like time, money, and attention are scarce , so using them for one thing means you cannot use them for something else.

• Economists often describe it as “the loss of potential gain from other alternatives when one alternative is chosen.”

Simple examples

• Choosing to work overtime tonight instead of meeting friends: the opportunity cost is the enjoyment and social connection you would have gained from seeing them.

• Spending $1,000 on a new phone instead of investing it: the opportunity cost is the investment return you would have earned on that $1,000.

In everyday decisions

• For individuals, opportunity cost shows up in choices like studying vs. relaxing, renting vs. buying, or commuting time vs. living in a smaller but closer apartment.

• For businesses, it appears in choices like using a factory line for Product A instead of Product B, or investing in marketing instead of new equipment.

Key features

• It focuses on the next best alternative, not every possible alternative.

• It includes both monetary and non‑monetary factors, such as time, convenience, and personal satisfaction, not just explicit dollar costs.

Why it matters now

• In 2020s discussions of personal finance, career moves, and even online “hustle culture,” people use “opportunity cost” to frame trade‑offs: e.g., time spent scrolling versus learning a skill, or cash in a low‑interest account versus higher‑yield investments.

• Thinking in terms of opportunity cost helps make more intentional choices by asking, “What am I really giving up by doing this instead of my best alternative?”