Opportunity Cost
Plain definition
The opportunity cost of any choice is the value of the best alternative you give up when you make it. It is what you sacrifice — not just in money, but in time, comfort, or output — by not taking the next-best option.
In economics
Opportunity cost is the true economic cost of every decision, and it sits at the heart of the production possibilities model, cost-benefit analysis, and comparative advantage. Decisions that ignore it — counting only explicit cash outlays — systematically understate what a choice really costs.
Example
If you spend four hours at a concert instead of working a 500-rupee-per-hour shift, the opportunity cost of the concert is 2,000 rupees in forgone earnings, on top of the ticket price. Even with a free ticket, the evening is not free.
People often confuse opportunity cost with the money actually spent. The cash price is an accounting cost; opportunity cost is broader — the best alternative forgone. Sleeping through a concert you already paid for still has an opportunity cost: everything else you could have done with those hours.