Opportunity Cost

Opportunity Cost

Opportunity cost is the value of the next best activity which cannot be chosen. It also means sacrificing one choice for another. It is also called the cost of forgone product after making the choice. Opportunity is a relationship between choice and scarcity. It plays a vital role in making decisions regarding using scare resource efficiently (Investopedia. N. D).

The example of opportunity costs are not only seen in organizations for production purpose, in fact it is part of daily life and every individual face opportunity cost in consumption. Opportunity cost does not only apply monetary or material things ...