The foregone benefit of choosing one alternative over another is measured by opportunity cost.
- In microeconomic theory, the term "opportunity cost" refers to the value or advantage that is lost when one activity is chosen over another. Simply put, it means that if you choose one activity, you forfeit the chance to do another.
- The value of the next-highest-valued alternative use of a resource is what economists mean when they talk about its "opportunity cost." You cannot, for instance, read a book at home during the time you would have spent seeing a movie and spend the money you would have spent on something else.
- Explicit and implicit opportunity costs are the two categories of opportunity costs. A direct monetary value can be placed on explicit opportunity cost.
Thus this is the meaning of opportunity cost.
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