Every economic choice has an opportunity cost --- the value of the best alternative you gave up in order to pursue the activity you chose instead. For example, if you receive a $50,000 job offer and a $40,000 job offer, the opportunity cost of taking the first job is $40,000, and the opportunity cost of taking the second job is $50,000. Is the option with the lowest opportunity cost always the best choice to make.

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Darryn D'SouzaLv10

28 Sep 2019

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One often-used definition of the term opportunity cost is that it is something that is given up when a choice is made. An example would be the money from working full-time given up by going to school. I suggest using the definition that opportunity cost is in terms of the foregone benefits of the next best alternative that could have been chosen. If the choice is for going to school instead of working full-time, then the opportunity cost would be all the benefits you would enjoy from working full-time in addition to the income you would earn. Using examples from your experiences and what you know, in what manners does the suggested change in definitions offer advantages in evaluating potential outcomes of choices either you or society have to make? How does this second opportunity cost definition help you make better decisions?

Discuss why we need to be concerned with the value of something we did not choose, as opposed to simply stating the value of the item we want to pick.

Example:

One of the key concepts in economics is an opportunity cost, which simply put, is the value we place on our second choice. That is when presented with a number of choices, describe the value of the one we pick in terms of the value we place on our next best choice. This definition may seem odd to you, given that we don't pick our second choice. For example, if I decide to go out for pizza, that means I did not go out for a hamburger (which would have been my second choice). In business, an opportunity cost is a lost opportunity when we make a choice; managers need to ensure they are making the choice that yields the highest return in order to maximize profit.