Which one of the following is the opportunity cost of a chosen activity?

Opportunity cost is a fundamental economic principle defined as the value of the next best alternative that is sacrificed when a choice is made [1]. It represents the gain foregone from the second-best activity rather than the sum of all possible alternatives [3]. For instance, if an individual chooses to invest money in a family business, the opportunity cost is the maximum benefit they could have received from the single best alternative use of that money, such as interest from a specific bank deposit [3]. While economic costs include both direct out-of-pocket expenses and opportunity costs, the opportunity cost itself specifically refers to the potential benefits missed from the next best option [2]. This concept highlights the trade-offs inherent in resource allocation for individuals, businesses, and governments [3].

Sources

1. [1] Microeconomics (NCERT class XII 2025 ed.) > Chapter 4: The Theory of the Firm under Perfect Competition > Opportunity cost > p. 61
2. [3] Microeconomics (NCERT class XII 2025 ed.) > Chapter 4: The Theory of the Firm under Perfect Competition > Opportunity cost > p. 62
3. [2] Microeconomics (NCERT class XII 2025 ed.) > Chapter 1: Introduction > Table1.1: Production Possibilities > p. 4