Opportunity cost in economics refers to the value of the next best alternative that is foregone when a decision is made to choose one option over another. It represents the potential benefits or gains that are missed out on by not selecting the alternative choice

. This concept highlights the trade-offs involved in decision-making because resources such as time, money, and labor are limited. For example, if you spend time studying, the opportunity cost is the enjoyment you could have had watching TV; if a company invests capital in new equipment instead of the stock market, the opportunity cost is the higher return it might have earned from stocks

. Opportunity cost includes both explicit costs (direct monetary costs) and implicit costs (non-monetary costs like time or lost opportunities). It is a critical consideration for individuals and businesses to make efficient and profitable decisions by weighing the benefits of all available alternatives

. In summary, opportunity cost is the cost of what you give up—the next best alternative—when making any economic choice. Understanding it helps clarify the true cost of decisions beyond just the immediate expenses