Opportunity cost is the loss of potential gain from other choices when one alternative is chosen.
Every time you decide to buy something, you choose to lose out on investing that money. If you buy a brand new car you don't need for $30,000, you're missing out on the opportunity to invest that money into the stock market and lose out on compound interest. This means that you should not buy on impulse, but think of your money in terms of future value.
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It is the estimated value of the best alternative or the best option that one misses out as a consequence of picking one particular option.
Example: Spending a limited resource, like Money, on healthcare, comes with the 'opportunity cost' of being unable to spend that amount on ed...
When mulling over multiple choices, the quality of any option cannot be assessed in isolation from its alternatives. The price you pay (or the sacrifice you make, or the benefits you give up) for doing what youβve chosen to do instead of doing something else is the opportunity cost.
Many people and organizations fail to take into account the various opportunity costs.
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