Opportunity Cost

Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land, labor, capital, etc. In other words, the opportunity cost is the opportunity lost due to limited resources. This implies that one commodity can be produced only at the cost of foregoing the production of another commodity. Opportunity Cost Examples, Someone gives up going to see a movie to study for a test in order to get a good grade.


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