Opportunity cost.
Definition
The value of the next best alternative that must be given up when making a choice. Every decision involves opportunity cost because resources like time, money, and labor are limited, so choosing one option means forgoing another.
Examples
Real-world.
- 1 Choosing to attend college means the opportunity cost is four years of full-time wages you could have earned
- 2 A city spending its budget on a new stadium gives up the opportunity to build a new school
- 3 A farmer planting corn instead of wheat loses the potential revenue from the wheat crop