Opportunity cost is defined as:

Opportunity cost is best defined as the value of the opportunity that you give up when you choose one activity instead of another. This concept is a fundamental principle in economics, highlighting that every choice we make has an associated cost—the potential benefits we forgo by not selecting the next best alternative.

When individuals or businesses make decisions, they must weigh the benefits of the option they select against the benefits they are giving up from the alternatives they did not choose. By understanding opportunity cost, one can make more informed decisions by evaluating not just the visible financial costs but also the value of all alternatives that are foregone. This helps individuals and firms consider both tangible and intangible factors in their decision-making processes.

In contrast, the other definitions focus on different financial concepts. One of them defines a calculation of marginal benefit versus marginal cost, which pertains to short-term decision-making rather than the broader concept of opportunity cost. Another option describes the expected value of a transaction, which relates specifically to risk and probability rather than the benefits lost from making a choice. Lastly, one option mentions the direct financial cost of purchasing, which disregards the broader implications of what is sacrificed in choosing to spend resources in one way over another.