What is Opportunity Cost?

Opportunity cost is defined as the next best alternative foregone. An example of this is:  Someone gives up going to see a movie to study for a test in order to get a good grade. The opportunity cost is the cost of the movie and the enjoyment of seeing it. This is a key element of microeconomics - which is the study of how individuals and businesses make decisions. 

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Answered by Varad H. Economics tutor

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