Opportunity cost is defined as the value of the next best alternative that is forgone when making a choice. This means that when you make a decision, the opportunity cost is the value of the best alternative that you had to give up in order to pursue the chosen option.
For example, imagine you have $10 to either buy a book or go to the movies. If you choose to buy the book, the opportunity cost would be the value of going to the movies, which is the next best alternative you had to forgo.
It's important to understand opportunity cost because it highlights the trade-offs involved in decision-making. By considering what you are giving up when you make a choice, you can make more informed decisions that align with your preferences and goals.
