Opportunity cost refers to the value of the next best alternative that is given up when choosing between mutually exclusive options. It is measured as the value of the best alternative forgone or sacrificed to pursue a particular plan of action. The opportunity cost of producing more of commodity X is that less of commodity Y can be produced, and vice versa, since resources have alternative uses and producing more of one thing means producing less of something else.

1. By : Dhirendra Chauhan
Opportunity
Cost

2. “Opportunity cost is an economics
term that refers to the value of what
you have to give up in order to
choose something else ”
Or
“Opportunity cost of an activity is equal to
the value of next best alternative which is
sacrifice or given up or foregone in
choosing a given alternative”
Opportunity Cost

3. “Value of a factor in its next best(Second
best) alternative use is called opportunity
cost”
“Opportunity cost of any commodity is the amount of other
good which has been given up(Sacrificed) in order to
produce that commodity”

7. Diagram
X Commodity
A
B
M
N
X
Y
x1 x2
y1
y2
Y
Commodity
x
y
O
Explanation
•Opportunity cost of producing
more X (X1X2) is less of Y
commodity (Y1Y2)
•Opportunity cost of producing
more Y(Y1Y2) is less of X
commodity (X1X2)
X1X2 Y1Y2
Y1Y2 X1X2

8. THANK
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