What is Opportunity Cost?

What is the meaning of the term opportunity cost in economics?

The economic concept known as opportunity cost refers to the item that a person forgoes from a list of alternatives.

For example, if a person makes a choice from three alternatives, then his opportunity cost are the items or alternatives that he failed to choose.

Another example: John has $500.00 which is enough to buy either a brand new Television set or a brand new computer. John needs both the computer and television, but his money can buy him only one of the two items. He thinks very critically and ends up buying the computer and forgoing the television set. We can therefore say that John’s opportunity cost is the television set that he decided to forego.

This is what the economic term opportunity cost means.