The Beechmont Crest Guide to Economics
Opportunity Cost
Opportunity cost is the measurement of everything that you have to give up in order to obtain to something that you want.
Suppose for example, that you decide to go on a trip to Europe. The opportunity costs of the trip include:
- The CDs, clothes, and other items that you have bought with the money that you spent on the trip.
- The other trips that you could have taken: to Asia, Hawaii, etc.
- The activities and events that you will miss in your hometown while you are away.
As you can imagine from the above example, every economic decision forces you to incur some opportunity costs. There is no way around it.
Moreover, the assessment of opportunity costs is usually subjective. Is a trip to Europe better than a trip to Hawaii? You have to make your decision based on your expectations for each option.