Opportunity Cost denotes the value of the highest-ranked forgone use of scarce resources. Mises connects cost with sacrificed satisfaction, while Buchanan emphasizes the chooser, decision time and expectations. A monetary figure can help comparison but cannot replace every personal valuation.
With one evening, choosing a course instead of work or rest costs the highest-valued available alternative. Do not add work and rest if both could not occur together. Federal Reserve Education defines the cost in terms of the next-best option. [Federal Reserve Education — Opportunity Cost]
A walk may charge no admission but takes time that could serve another goal. Mises understands cost as the value of sacrificed satisfaction. Zero payment therefore does not mean zero cost; nor can everyone’s time automatically be priced at the same hourly wage. [Mises — Human Action, IV]
A job you cannot take because of timing or qualifications is not automatically an option forgone today. Buchanan ties cost to the decision situation. First establish what choices are actually available, including constraints and whether activities can be combined. [Buchanan — Cost and Choice, 3]
For an already-paid nonrefundable course, compare remaining attendance benefits with other uses of time. Buchanan distinguishes choice-influencing cost from past costs. If a ticket can be resold or refunded, that present option does belong in the new decision. [Buchanan — Cost and Choice, 3]
Buchanan emphasizes valuation at the moment of choice. A subsequently winning investment that could not then be known as certain does not prove a certain cost at the time. Separate available information and expected outcomes from what the future revealed. [Buchanan — Cost and Choice, 3]
Using your own room as a workshop may sacrifice available net rental income. Buchanan’s distinction requires a consistent basis for comparison. Do not add that same forgone rent again under another label; distinguish it from new workshop operating expenses. [Buchanan — Cost and Choice, 3]
Buchanan distinguishes observed monetary magnitudes from subjective choice-influencing cost. An account can document expenditure but cannot directly measure forgone rest or work’s personal meaning. Specify what a figure measures instead of claiming every cost has a ready-made market price. [Buchanan — Cost and Choice, 3]
Using resources for Bitcoin gives up other uses, such as a reserve, consumption or debt repayment. This applies the concept without recommending a choice. Compare the same horizon, allowing for uncertainty, access to funds and costs; past price growth does not determine future forgone value. [Mises — Human Action, IV] [Buchanan — Cost and Choice, 3]
For the clearest picture, read this entry together with Ordinal Utility, Subjective Value Theory, Economic Calculation, Capital Goods, Time Preference. The reverse links also lead from Subjective Value Theory, Marginal Utility, Ordinal Utility, Human Action.