Definition of

Opportunity Cost

Opportunity Cost

The value of other choices you give up when you do something.


• You decide to study to become a Doctor. The "opportunity cost" is the money you could have earned in an office job instead of studying.

• The bakery wants to buy a new oven for $2,000. But that money could be earning 5% interest in the bank, so the "opportunity cost" is the 5% interest.

• Sam decides to go fishing early. The opportunity cost is the enjoyment of sleeping late that day.