Final answer:
Opportunity cost is the value of the next best alternative forgone when a choice is made, while a trade-off is the process of giving up one benefit to gain another. Examples include choosing a vacation over home renovation (trade-off) and measuring the value of increased home equity or enjoyment lost (opportunity cost).
Step-by-step explanation:
The difference between opportunity cost and trade-off involves measuring the cost of choices made in terms of the next best alternative and the benefits forgone to obtain a desired benefit, respectively. A trade-off occurs when one benefit is given up to gain another, such as choosing to go to a concert over a movie on a Friday night. In contrast, the opportunity cost measures the value of the foregone alternative that you give up by making a choice, such as choosing to go to the concert instead of the next best option, which could be visiting a grandparent or working at a part-time job.
For example, if someone decides to spend money on a vacation instead of renovating their home, the trade-off is the home renovation they give up for the vacation experience. The opportunity cost is measured by the value of the next best alternative that could have been chosen, which in this case may be the increased home equity or enjoyment from the home improvement that was forgone.