You see a CD and a DVD that you like. However, you have only enough money to buy one. You decide to buy the CD. What is the opportunity cost of your choice?

The DVD is the opportunity cost

Explanation:

The opportunity cost is also known as the forgone alternative. First of all we know that resources are scarce and yet human needs are numerous and needs to be satisfied. But people have to order their needs based on importance and the need with the greatest value is often chosen ahead of other.

The DVD that was forgone for the CD is the opportunity cost of this choice. Because since money cannot buy both items, buying the CD and forgetting about the DVD makes the DVD the opportunity cost.

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