In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives. Assuming the best choice is made, it is the "cost" incurred by not enjoying the benefit that would have been had by taking the second best available choice.[1] The New Oxford American Dictionary defines it as "the loss of potential gain from other alternatives when one alternative is chosen". As a representation of the relationship between scarcity and choice,[2] the objective of opportunity cost is to ensure efficient use of scarce resources.[3] It incorporates all associated costs of a decision, both explicit and implicit.[4] 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 an opportunity cost.
^"Opportunity Cost". Investopedia. Retrieved 18 September 2010.
^Buchanan, James M. (1991). "Opportunity Cost". The World of Economics. The New Palgrave. pp. 520–525. doi:10.1007/978-1-349-21315-3_69. ISBN 978-0-333-55177-6 – via SpringerLink.
^"Economics A-Z terms beginning with O". The Economist. Retrieved 1 November 2020.
^Hutchison, Emma (2017). Principles of Microeconomics. University of Victoria.
In microeconomic theory, the opportunitycost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to...
in the best alternative investment of equivalent risk; this is the opportunitycost of capital. If a project is of similar risk to a company's average...
increasing average costs. Cost is measured in terms of opportunitycost. In this case the law also applies to societies – the opportunitycost of producing a single...
book keeping records as an expense or asset cost basis. Opportunitycost, also referred to as economic cost is the value of the best alternative that was...
Opportunism Opportunitycost All pages with titles containing opportunity This disambiguation page lists articles associated with the title Opportunity. If an...
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National) which preceded yet another major contribution, alternative cost (or opportunitycost) theory, which was drawn from his study Theorie der gesellschaftlichen...
In economics, an implicit cost, also called an imputed cost, implied cost, or notional cost, is the opportunitycost equal to what a firm must give up...
cost differs from accounting cost because it includes opportunitycost. (Some sources refer to accounting cost as explicit cost and opportunitycost as...
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machinery, including possibly sunk costs. Total cost in economics includes the total opportunitycost (benefits received from the next-best alternative)...
unpaid domestic work: the opportunitycost method, the replacement cost method, and the input/out cost method. The opportunitycost method measures the value...
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taxation. Marginal cost of capital (MCC) schedule or an investment opportunity curve is a graph that relates the firm's weighted cost of each unit of capital...
negative ways. The negative effects would include an increase in the opportunitycost of holding money, uncertainty over future inflation, which may discourage...
opportunitycost, and inventory costs related to perishability, shrinkage (leakage) and insurance. Carrying cost also includes the opportunitycost of...
good can be produced at a lower relative opportunitycost or autarky price, i.e. at a lower relative marginal cost prior to trade. Comparative advantage...
action. Economic rent is also independent of opportunitycost, unlike economic profit, where opportunitycost is an essential component. Economic rent is...
Strategic Foresight Group, an India-based think tank, calculated the opportunitycost of conflict for the Middle East for 1991–2010 at US$12 trillion in...
In linear programming, reduced cost, or opportunitycost, is the amount by which an objective function coefficient would have to improve (so increase...
split into several categories, including explicit cost, implicit cost, delay cost, and opportunitycost. The accurate measurement of each of these costs...
similar payoffs. The choice to rebel is inherently linked with its opportunitycost, namely what an individual is ready to give up in order to rebel. Thus...
In economics and related disciplines, a transaction cost is a cost in making any economic trade when participating in a market. The idea that transactions...
country due to gender inequality. It uses three dimensions to measure opportunitycost: reproductive health, empowerment, and labor market participation....
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