What is opportunity cost?
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Opportunity cost refers to the value of the next best alternative forgone when a decision is made. In other words, it’s the cost of choosing one option over all other available alternatives. When you make a decision, you not only consider the benefits of what you’ve chosen but also the potential benefits you’re giving up by not choosing an alternative. Understanding opportunity cost is essential in decision-making, whether in personal finance, business, or economics, as it helps assess the true cost of choices and allocate resources efficiently.