In economics, what is the value of the best alternative forgone when making a choice called?

In economics, the value of the best alternative forgone when making a choice is called opportunity cost.

Choosing one option means giving up the benefits of other options. For example, spending an evening studying may mean giving up paid work or leisure. The opportunity cost is the value of the best of those alternatives, not the combined value of every alternative.

Opportunity cost can involve money, time, enjoyment, production, or other benefits. It applies to households, firms, and governments. A government building a hospital may give up the opportunity to use the same land and budget for a school.

People often confuse opportunity cost with the money price of an item. Price is the amount paid in a transaction; opportunity cost includes what the decision-maker sacrifices by choosing that purchase or activity. Some opportunity costs are explicit and measurable, while others are non-monetary.