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opportunity cost| In economics, that which has been forgone in order to achieve an objective. A family may choose to buy a new television set and forgo their annual holiday; the holiday represents the opportunity cost. |
| In decision-making, economists prefer to look at the opportunity cost because it requires a rational approach (all alternatives are examined), whereas an accountant's view of cost is more concerned with the way in which money is spent and the profit or loss that results. |
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