Question

I don't really understand opportunity cost? I know it means the second best choice / the price of something you give up to get your first choice... But would anybody like to provide examples or a more thorough explanation?

Answer 1

When you make a decision, once it is made you give up the other options that were available. Those options are your opportunity cost.

Answer 2

My economics teacher gave us an article of a 4 year old boy, who would need treatment to survive. If the 4 year old boy didn't take treatment (reason: low survival rate) other patients would be able to get the treatment and live.

The opportunity cost of not treating the boy would be his life.
^ Is that correct?

Answer 3

And thank you by the way :)

Answer 4

I've always thought about opportunity cost as options lost after something has happened. In case of the boy who needed treatment what options were available to him before the decision to take the treatment was made. In other words what options would be lost if he took the treatment? I can't think of opportunities associated with not taking the treatment. We always think about the decision 'to do' something. Thus, in case of taking the treatment by the boy I would think about negative opportunity cost. In other words, there is no good in not taking the treatment.