Opportunity cost refers to the value of the next best alternative that you give up when making a choice and is a key concept in IGCSE Business and economics.
In simple terms, when you decide to do one thing, you lose the chance to do something else.
For example, if a business spends £10,000 on advertising, it might have to delay buying new equipment. Similarly, if a student spends time studying Business, they might miss out on playing sports.
Understanding opportunity cost helps both individuals and businesses make smarter decisions by thinking about what they are sacrificing. Businesses must carefully consider opportunity costs when choosing how to spend money, use resources, or invest in new projects. By weighing up different options, they can make better choices that help them grow and succeed.
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