Opportunity Cost in Microeconomics

The simplest way to estimate the opportunity cost of any single economic decision is to consider, "What is the next best alternative choice that could be made?" (This is even though most economic decisions involve multiple alternatives.) The opportunity cost of paying for college this semester could be the ability to make car payments. The opportunity cost of a vacation in the Bahamas could be the down payment money for a house.

Note that opportunity cost is not the sum of the available alternatives, but rather of benefit of the best alternative of them. The opportunity cost of the city's decision to build the hospital on its vacant land is the loss of the land for a sporting center, or the inability to use the land for a parking lot, or the money that could have been made from selling the land, or the loss of any of the various other possible uses -- but not all of these in aggregate.
Although opportunity cost can be hard to quantify, its effect is universal and very real on the individual level. The principle behind the economic concept of opportunity cost applies to all decisions, not just economic ones.
Since the work of the Austrian economist Friedrich von Wieser, opportunity cost has been seen as the foundation of the marginal theory of value.

Throughout microeconomic theory, it is assumed that:
- The real cost that measure economic decisions is the “Opportunity cost”, rather than “Monetary cost.”
- All the time the agents behave as rationales, so they minimize the opportunity cost, as hence: All economic resources are and located in their best possible alternative of use.
- The last issue operates only if the markets are released to evolve under the free forces of supply and demand, so individual agents must let that in the long wave all temporal disturbances in prices, become endogenously adjusted to the initial equilibrium point.