opportunity cost


Definition of opportunity cost

: the added cost of using resources (as for production or speculative investment) that is the difference between the actual value resulting from such use and that of an alternative (such as another use of the same resources or an investment of equal risk but greater return)

Examples of opportunity cost in a Sentence

Recent Examples on the Web But where, as now, the U.S. has to provide the armor foundation for Europe's defense, there's a clear opportunity cost against China. Tom Rogan, Washington Examiner, "Can America win the next big war?," 3 Dec. 2020 There is some opportunity cost in microwaving a fun playoff team with Paul. Jeremy Cluff, The Arizona Republic, "Phoenix Suns a threat in Western Conference after moves in NBA free agency, offseason," 26 Nov. 2020 Outside America, there’s an opportunity cost to backing off of climate, too, said Andrew Light, who helped build the Paris agreement as a senior state department climate negotiator under Obama. Tim Mcdonnell, Quartz, "The cost of a Trump term, in billions of tons of carbon emissions," 4 Nov. 2020 In normal times, that money might have earned more interest elsewhere, but with rates at zero, the opportunity cost of a SPAC is low. James Mackintosh, WSJ, "Wall Street’s Hottest Financing Tool Makes Me Worry About the Market," 17 Oct. 2020 In a hot market, there is a significant opportunity cost of tying capital up for a lengthy period of time. Laura Forman, WSJ, "SPACs Could Be a Bubble That Never Quite Pops," 18 Oct. 2020 Another consideration is the opportunity cost of not having that extra money invested elsewhere. Zach Wichter, Star Tribune, "Prepaying your mortgage: How reducing your loan principal can lead to big savings," 25 Sep. 2020 The opportunity cost of attending freshman classes this year includes not attending them next year. Andrew Stuttaford, National Review, "The Capital Letter: Week of August 17," 21 Aug. 2020 Add it all up using the ubiquitous 20X Ebitda multiple, and Tesla will be an automaker worth somewhere in the ballparkof $400 billion in 2025, Osha says—or about $300 billion today, taking risk and opportunity cost into consideration. Andrew Nusca, Fortune, "Teslanomics: How to justify being the most valuable car company on earth," 10 Aug. 2020

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.

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First Known Use of opportunity cost

1894, in the meaning defined above

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Time Traveler for opportunity cost

Time Traveler

The first known use of opportunity cost was in 1894

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Statistics for opportunity cost

Last Updated

16 Dec 2020

Cite this Entry

“Opportunity cost.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/opportunity%20cost. Accessed 18 Jan. 2021.

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More Definitions for opportunity cost

opportunity cost

op·​por·​tu·​ni·​ty cost

Legal Definition of opportunity cost

: the cost of making an investment that is the difference between the return on one investment and the return on an alternative

More from Merriam-Webster on opportunity cost

Britannica.com: Encyclopedia article about opportunity cost

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