Opportunity cost of choosing the best alternative is the benefit foregone due to not choosing the next best alternative.
Suppose a producer has three business offers involving profits of Rs. 8,000, Rs. 6,000. The best option is Rs.10,000. The opportunity cost of choosing this option is Rs.8,000 the benefit foregone by not choosing the next best option.
Detailed Answer:
Opportunity cost is the next best alternative foregone in choosing a given alternative.
Suppose an economy produces only two goods X and Y. Further, suppose that by employing these resources fully and efficiently, the economy produces 1X + 10Y. If the economy decides to produce 2X, it has to cut down production of Y by 2 units. Then 2Y is the Opportunity Cost of producing 1X.
