Opportunity cost is the value of the next best alternative that you give up when you make a choice.
🔁 Simple Definition:
Opportunity cost = What you sacrifice by choosing one option over another.
🧠 Why It Matters:
Every time you use a resource — time, money, or effort — you give up the chance to use it for something else. Opportunity cost helps you evaluate trade-offs so you can make better decisions.
📊 Example:
You have $1,000. You can either:
- Invest in a course to improve your skills, or
- Buy a new phone
If you choose the phone, your opportunity cost is the improved career prospects and higher income you might have gained from the course.
🕒 Time-Based Example:
You spend 2 hours watching Netflix.
The opportunity cost could be:
- 2 hours of studying
- 2 hours of freelancing and earning money
- 2 hours spent exercising
📌 Key Points:
- Opportunity cost is not always about money.
- It’s about value — financial, personal, or emotional.
- It’s often invisible, but very real.
Here’s a visual representation of opportunity cost. It shows how choosing Netflix (relaxation) over studying (future income) means giving up a higher potential value — that difference is the opportunity cost. Let me know if you’d like a version with time or business examples.
