Opportunity Cost

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Opportunity cost refers to the value of the next best alternative that is forgone as a result of choosing one option over another. In other words, it is the cost of what is given up when a choice is made.

For example, if a person decides to invest in a stock, the opportunity cost is the return that could have been earned if the money had been invested in another stock or asset instead.

Opportunity cost is an important concept in economics and finance, as it helps individuals and businesses make informed decisions about how to allocate their resources.

By considering the opportunity cost of a decision, individuals and businesses can better weigh the benefits and drawbacks of different options and make more efficient use of their resources.

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