Final answer:
Opportunity cost is a key economic concept describing the value of the next best alternative foregone as the result of making a decision. It helps in evaluating trade-offs and making informed choices, as illustrated by Alphonso's decision between purchasing a burger and bus tickets.
Step-by-step explanation:
The concept of opportunity cost is a fundamental principle in economics that relates to the idea of trade-offs and the cost of forgone alternatives. It represents the benefits an individual, investor, or business misses out on when choosing one alternative over another. As such, if Alphonso chooses to buy a burger, he foregoes the opportunity of using the money to purchase four bus tickets; hence the opportunity cost of the burger is the four bus tickets he has to give up. This cost is not merely the monetary value, but it encompasses the value of everything Alphonso forgoes when making that decision.
Opportunity costs play a crucial role as they help in decision-making, allowing individuals to consider the next best alternative they are giving up. It provides a broader view of the costs involved in choices and helps to measure the trade-offs that decision-makers face between different options.