An opportunity cost refers to the trade-off of making one choice and giving up a different choice (B). It represents the value of the next best alternative forgone when a decision is made. In simpler terms, it is what you give up when you choose one option over another.
For example, imagine you have [tex]$20 to spend, and you can either buy a book for $[/tex]10 or go to the movies for $15. If you choose to buy the book, the opportunity cost would be the enjoyment and experience you could have gained from going to the movies instead.
Understanding opportunity cost is important in decision-making as it helps individuals and businesses assess the benefits and drawbacks of different choices before making a decision. By recognizing opportunity costs, people can make more informed and strategic choices based on what matters most to them.
