Opportunity Cost: The next best choice that someone must give up when choosing between several mutually exclusive things. This is because of scarcity; there are not infinite supplies of everything we wish to consume and what we can produce with our limited resources of time, land, labor, capital and technology.
For example, by waking up early and going to the gym my opportunity cost is an hour of sleep. By choosing to work as a teacher, I am giving up potential opportunities (for now) of pursuing a more lucrative career.
Opportunity Cost is a very key concept in economics and is the foundation of all production and consumption models.
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