Definition :Opportunity cost is the value of the next best option you give up when you make a decision. It is not always about money – it can also be about time, enjoyment, or any other benefit you miss out on.

Why it is important:

• Resources like time, money, and energy are limited.

• Because of scarcity, people, businesses, and governments must make choices.

• Understanding opportunity cost helps us make smarter decisions.

Everyday Life Examples:

1. Students If a student spends the evening revising for exams, the opportunity cost may be watching their favorite TV show or hanging out with friends.

2. Workers If a worker chooses to work overtime, the opportunity cost is the family time or rest they give up.

3. Consumers If you buy a new football, the opportunity cost might be the snacks, clothes, or video games you could have bought instead.

4. Producers (Firms)If a company uses land to build a factory, the opportunity cost might be using that land to build houses or a shopping mall.

5. Governments If the government spends money on building new roads, the opportunity cost could be fewer funds for hospitals or schools.

Football Example:

If you spend your evening playing football, the opportunity cost could be:

• Time spent studying and improving grades.

• Playing video games with friends.

• Doing another sport or hobby.

Key Point:

Every decision involves giving up something. Opportunity cost reminds us to think: “If I choose this, what am I missing out on?”