What is Opportunity Cost?

A definition of Opportunity Cost

“Opportunity cost represents the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.”

Opportunity Cost in Business Glossary - What is an Opportunity Cost?

Business Glossary > What is Opportunity Cost?


Examples of Opportunity Cost in a Sentence:

Considering opportunity cost is crucial in decision-making.

Every choice you make has an associated opportunity cost.

Investors must weigh the opportunity cost of forgoing other investments.

Why is Opportunity Cost Important in Business?

Understanding opportunity cost is vital for making informed decisions in both personal finance and business strategy. It helps identify the potential benefits that are forfeited in favor of the chosen option, guiding more effective decision-making.

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Associated Terms

Here are some associated business terms and synonyms for “Opportunity Cost”:

  • Alternative Cost
  • Foregone Benefit
  • Trade-off

Amazon Opportunity Cost

Amazon often evaluates the opportunity cost of investing in new technologies versus expanding their current offerings. By understanding these costs, Amazon can allocate resources efficiently to pursue the most lucrative opportunities.

Final Notes on Opportunity Cost

When evaluating opportunity costs, it’s essential to analyze the possible benefits and drawbacks of each alternative.

Companies should measure opportunity costs to optimize resource allocation effectively.

Informed decision-making can lead to more successful business outcomes by understanding the nuances of opportunity cost.


This has been a definition of Opportunity Cost meaning.

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