Final answer:
The value of benefits foregone when choosing one alternative over another is called opportunity cost, which quantifies the trade-off made in a decision. Opportunity cost is personal and varies according to individual values and circumstances.
Step-by-step explanation:
The value of benefits foregone by selecting one decision alternative over another is known as opportunity cost. Opportunity cost is a fundamental principle in economics that refers to the value of what you have to give up in order to choose something else. For instance, if you decide to spend the evening studying for an exam rather than going out with friends, the opportunity cost of studying is the enjoyment you would have received from spending time with your friends. Conducting a cost/benefit analysis is a way to incorporate opportunity costs into decision-making. This involves comparing the marginal costs and marginal benefits to determine which option provides the greatest net benefit. The opportunity cost varies from person to person as preferences and circumstances differ, leading to unique trade-offs for each decision made. For example, when Alphonso decides to buy a burger instead of saving his money for bus tickets, he considers the opportunity cost. If the joy he anticipates from the burger outweighs the utility of the bus tickets he forgoes, he will purchase the burger. His decision thus reflects the best trade-off according to his current needs and wants.