Opportunity Cost

Opportunity cost is the value of the next best alternative that must be given up in order to pursue a chosen action, and it is one of the most fundamental ideas in economics for evaluating any decision under scarcity. Rather than measuring cost only in money actually spent, an opportunity cost analysis also counts the benefit of whatever alternative use of time, money or resources was foregone. The concept was formalized within the Austrian school by the economist Friedrich von Wieser in the late nineteenth century, as part of the broader Austrian argument that economic value reflects subjective individual judgment about alternatives rather than any objective measure of cost, and it remains central to how economists across schools of thought reason about tradeoffs.