When one decision is made, the next best alternative not chosen is called Opportunity Cost.
The opportunity cost of a certain activity option is defined as the loss of value or benefit that would result from engaging in that activity (the cost) as opposed to engaging in an alternative activity that offers a higher return in value or benefit in microeconomic theory.
The comparative advantage increases as the opportunity cost decreases. For instance, renting a car is prohibited if you buy one and use it just for transportation, but buying a car is permitted. Simply said, it indicates that you trade one item for another.
Opportunity cost can be expressed in the following simple equation: "Opportunity Cost = (returns on best Forgone Option) - (returns on Chosen Option).
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