Final answer:
Choosing a movie over renting a DVD and giving up the latter's cost is an example of opportunity cost. It represents the most desirable alternative forfeited in the decision-making process.
Step-by-step explanation:
When making a decision to either go to a movie or rent a DVD, choosing the movie instead of the DVD means that the cost of renting the DVD would be eliminated. This is an example of opportunity cost. Opportunity cost is a fundamental concept in economics that refers to the loss of potential gain from other alternatives when one alternative is chosen.
In the context of economics and decision making, conducting a cost/benefit analysis can assist in making a choice by comparing what will be sacrificed (the cost) and what will be gained (the benefit). It’s also essential to consider marginal costs and marginal benefits, wherein you evaluate the additional cost and benefit of adding one more unit to your decision. This process can lead to achieving the consumer equilibrium, the point where the mix of goods purchased and consumed gives the maximum utility to the consumer.