Resource Allocation6 min read
Opportunity Cost
Opportunity cost is what you give up when you choose one option over another. Every decision has a cost - not just the money you spend, but the value of the next best alternative you didn't choose.
Core Definition
The value of the highest-valued alternative that must be given up when making a choice. It's not what you choose, but what you choose not to do.
Why It Matters
Resources (time, money, attention) are always limited
Every choice eliminates other possibilities
The real cost of decisions is often hidden
Helps prioritize among competing options
Reveals the true value of your choices