What is the opportunity cost of an economic choice?

The opportunity cost of an economic choice is the next-best alternative forgone.

Because resources such as time, money, labor, and land are scarce, choosing one option means giving up another. Opportunity cost measures the value of that most valuable rejected option, not every possible alternative. For example, attending a two-hour lecture may have the opportunity cost of the best work, rest, or study that could have been done instead.

Opportunity cost can be monetary, but it does not have to be. A government building a hospital may give up a school or road project; a student studying may give up paid work. The relevant comparison is always with the best available alternative under the circumstances.

People sometimes confuse opportunity cost with the listed price of a purchase. Price is what is paid to obtain something, while opportunity cost includes what the decision-maker sacrifices by choosing it. Economists use the concept in personal decisions, business investment, public policy, and international trade.