Finance
What is Opportunity cost?
Opportunity cost is the value of the best alternative you give up when you make a choice. Every decision has one — the time, money, or option you didn't pick.
See it, don’t just read it.
Watch a 2-minute lesson with voice + animation that explains opportunity cost.
Key things to understand
- 1It's not just money spent, but the next-best thing you forgo.
- 2Example: spending an evening studying has the opportunity cost of the movie you skipped.
- 3It's central to smart decisions about money, time, and resources.
- 4Recognizing it helps you weigh trade-offs honestly.
Frequently asked questions
- Can you give an example of opportunity cost?
- If you spend $1,000 on a holiday, the opportunity cost might be the investment returns that money could have earned instead.
- Is opportunity cost only about money?
- No — it applies to time, attention, and any limited resource.
- Why does opportunity cost matter?
- It reveals the true cost of a choice by accounting for the best thing you gave up.