Economicscalendar_todayLast updated: Apr 2026
What is Opportunity Cost?
/ˌɒpəˈtjuːnɪti kɒst/
The value of the next-best alternative you give up when you make a choice. Every decision has an opportunity cost — choosing one option means forgoing everything else you could have done with those same resources.
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Everyday Example
Spending £20 on a movie ticket means giving up the book you could have bought, or the hour of work you could have done. The opportunity cost isn't just the money — it's everything else you could have done with it.
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“A company investing £1 million in new machinery gives up the 5% annual interest it could have earned in a savings account. That £50,000 foregone each year is the true opportunity cost of the investment.”
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Did you know?
The term was coined by Friedrich von Wieser, an Austrian economist, in 1914. He argued that the true cost of any resource is its value in its best alternative use.
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Key Insight
Time is the most common opportunity cost we face. Every hour spent on one activity is an hour not spent on another — making time, unlike money, the one resource you can never earn back.
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