Faced with scarcity, we have to make choices. I made a choice to drink the red wine
, instead of the white. The developed world made a choice not to forgive third world debt. I'm making a choice in sitting here, writing this node on 1am Christmas
Opportunity cost is the cost of what I'm missing out on. It is the value of the BEST alternative forgone. By best alternative in my case, is to be on my bike, cycling my way into the night and out of this joint.
An opportunity cost is expressed in relative prices. If a coffee and a chocolate bar were the only two goods that existed in the world (ok, just pretend), and a coffee cost $1, and a chocolate $0.50, then the opportunity cost of one coffee is two chocolates.
This writeup sounds a bit too bitter to be about economics.