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Economics vocabulary · Core Concepts

Opportunity cost

Meaning in economics, with examples

nounCore term

In economics, opportunity cost means: The value of the best alternative you give up when you make a choice, for example the salary you lose by studying full time instead of working.

In Turkish: fırsat maliyeti, alternatif maliyet

How it is used

A key idea in every introductory course and in business decisions. People say the opportunity cost of something is..., and point out that a choice can have a high or low opportunity cost even when no money changes hands.

Example sentences

  1. The opportunity cost of a master's degree includes two years of lost income, not just the tuition fees.

  2. When the government spends more on roads, the opportunity cost is the schools or hospitals it could have built instead.

Common collocations

  • the opportunity cost of
  • a high opportunity cost
  • low opportunity cost
  • calculate the opportunity cost
  • scarcityThe basic problem that resources such as time, money, land and labour are limited while people's wants are not, so choices always have to be made.
  • trade-offA situation in which getting more of one thing means accepting less of another, so you have to balance two goals against each other.
  • comparative advantageThe ability of a country or person to produce something at a lower opportunity cost than others; it is the basis of the gains from trade.
  • incentiveSomething such as a reward, a price or a penalty that encourages people or firms to act in a particular way.

More terms: Core Concepts

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This page explains English vocabulary for learners. It is not financial advice.