Opportunity cost is the value of the next best alternative foregone in decision-making, signifying trade-offs and the need to sacrifice one option for another.
Opportunity cost is the value of the next best alternative foregone in decision-making, representing the trade-offs individuals face. It signifies what must be given up to obtain something desired and varies depending on personal preferences and available alternatives.
For example, if a person chooses to go to the movies on a Friday night, their opportunity cost might be spending time with a favorite grandparent or working at a part-time job instead. Understanding opportunity cost is essential in analyzing choices and resource allocation.
Every decision involves evaluating and comparing different alternatives, with the chosen option having its opportunity cost in terms of the value of the next best alternative not pursued.
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