Final answer:
Opportunity cost is the value of the alternative foregone when a choice is made between multiple options. It is a central concept in economics and depends on an individual's preferences. The opportunity cost changes based on what is considered the most valuable alternative that is not chosen.
Step-by-step explanation:
An example of an opportunity cost is when you have multiple desirable activities to choose from, and you select one, the value of the next best alternative that you did not choose is your opportunity cost. It varies from person to person, as preferences differ. For instance, if given the choice between going to the movies, seeing a concert, volunteering at a local soup kitchen, visiting your favorite grandparent, or working at a part-time job, and you choose to go to the movies, the opportunity cost could be the experience of visiting your favorite grandparent or the wages from the part-time job, depending on which of these options is the most valuable to you.
Economists define opportunity cost as the cost of one item being the lost opportunity to do or consume something else. They believe that since people must make choices, they inevitably face tradeoffs where they have to give up things they desire to obtain other things they desire more. Therefore, opportunity cost is a fundamental principle of economics and an essential part of human existence's decision-making process.