Opportunity cost
Definition. Opportunity cost is the value of the next best alternative forgone when a choice is made. Because resources are scarce and have alternative uses, choosing to use them one way means giving up the benefit that could have been obtained from the best alternative use.
Opportunity cost underlies all economic decision making by individuals, firms, and governments, and is illustrated by movements along a production possibility curve, where producing more of one good means producing less of another.
This term belongs to Opportunity Cost in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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