Opportunity Cost

The value of the best alternative foregone when choosing one course of action. The true cost of something is not an absolute number, but rather the difference relative to your next-best option.

Read the daily articles behind this idea on the Chinese edition.

Related principles

• → Links
  Pareto Efficiency
• → Links
  Principal-Agent Problem
• → Links
  Cost Pass-Through Paradox & Demand Destruction
• → Links
  Supply Chain Diversification and Switching Cost Dynamics
• → Links
  Strategic Asymmetry of Resource Reserves vs. Production Capacity
• → Links
  Dilution vs. Control Preservation Tradeoff
• → Links
  Political Boundaries of Tax Arbitrage
• → Links
  Growth vs. Dilution Tradeoff
• ↺ Counters
  Waste-to-Value Upcycling