Recent Examples of opportunity cost from the Web
Detractors often cite the opportunity cost of investing in a home.
Because average wages tend to rise, the opportunity cost of spending time with your children has grown.
Tony Gibson, board member and former chairman of the Johnson’s Park Neighborhood Association, said the redevelopment of the Milwaukee Mall may be the opportunity cost for improving the area.
Granted, there’s opportunity cost with any move, but the same is true with standing pat.
But the general trends are clear: return on investment is falling and certain therapeutic spaces are championed at the opportunity cost of others.
The opportunity cost of holding cash is pretty high.
That Are 500 Calories or Less Just be sure to factor in the opportunity cost of your debilitating hangover the next day.
By leaving millions of long-stay immigrants in the shadows, America is inflicting a vast opportunity cost on itself.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'opportunity cost.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
Financial Definition of OPPORTUNITY COST
What It Is
Opportunity cost refers to the value forgone in order to make one particular investment instead of another.
How It Works
For example, let's assume you have $15,000 that you could either invest in Company XYZ stock or put toward a graduate degree. You choose the stock. The opportunity cost in this situation is the increased lifetime earnings that may have resulted from getting the graduate degree -- that is, you choose to forgo the increase in earnings when you use the money to buy stock instead.
Here's another example. Let's say you have $15,000 and your choice is to either buy shares of Company XYZ or leave the money in a CD that earns only 5% per year. If the Company XYZ stock returns 10%, you've benefited from your decision because the alternative would have been less profitable. However, if Company XYZ returns 2% when you could have had 5% from the CD, then your opportunity cost is (5% - 2% = 3%).
Why It Matters
Opportunity cost is all about the most basic of economic concepts: trade-offs. It's a notion inherent in almost every decision of daily life and of investing: if you make a choice, you forgo the other options for now. And what's been given up can sometimes turn out to have been the wiser choice, which is why opportunity cost is best measured in hindsight -- after all, it is impossible to know the end outcome of any investment.
legal Definition of opportunity cost
Learn More about opportunity cost
Britannica.com: Encyclopedia article about opportunity cost
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