Opportunity Cost

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    An economist is concerned with the opportunity cost of decisions.

    Opportunity cost is the next best alternative foregone.

    Let’s say you have £1 to spend on a chocolate bar and you have the choice of buying a Milky Way for £1 or a Lion bar for £1. You only have enough money to buy one chocolate bar. If you buy the Milky Way then you have no money left so you cannot buy the Lion bar. So the opportunity cost of buying a Milky Way is the Lion bar, you could have bought the Lion bar if you did not buy the Milky Way.

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