What is lost opportunity cost?
According to the Merriam-Webster Dictionary… “Lost opportunity cost is the value of what is lost when you choose between mutually exclusive alternatives.” Furthermore, the NationMaster Online Encyclopedia describes it this way… “Opportunity cost is a central concept of microeconomics. The opportunity cost of any given choice is the most valuable, i.e., the second best, alternative.” You can estimate the values of both the discarded alternative and the choice you make before you decide between two or more competing options. The actual cost of a lost opportunity can only be accurately determined, however, after you have chosen one option, rejected all others, and experienced the outcome. For example, you might be considering the purchase of a new lawnmower; either a gas-powered mower or an electric-powered mower. We’ll postulate that, even after considering the cost of fuel and maintenance over its expected useful life, the gasoline engine mower appears to be less expensive. The oppo
