What is opportunity cost?

Economics is all about making choices. These choices are ruled by scarcity, which is the theory that there are finite resources at our disposable. Because of scarcity, we cannot have everything we want. Therefore, a  choice must be made. The next best alternative to this choice is called the opportunity cost. In other words, it is what has been sacrificed in choosing a particular option. 

A good example of this is the decision between working and not working. Time spent working means money is being made which can afford nice things. However, the 'opportunity cost' of working (the next best alternative) is time spent relaxing away from work, or leisure time. Leisure time is sacrificed in order to give time for money to be made from work. A choice must be made by the consumer of what they would prefer because there is only so much time they can devote to each option, so time spent participating in one means time sacrificed participating in the other. 

Opportunity cost, therefore, represents the 'cost' to the consumer of choosing a particular action, say more time spent working, by analysing what has been sacrificed.