What is the term for the next best alternative not chosen when making a decision?

The term for the next best alternative that is not chosen when making a decision is opportunity cost. In economics, opportunity cost represents the value of the foregone option when a choice is made. It emphasizes that every decision involves trade-offs, as choosing one option typically comes with the cost of giving up another. This concept is central to understanding how individuals and businesses allocate resources effectively, as it reflects the true cost of a decision beyond just monetary expenditure. For instance, if you decide to spend time studying instead of going out with friends, the opportunity cost is the enjoyment and social interaction you forego by not opting for the alternative. Understanding opportunity cost helps individuals and firms make better-informed decisions by highlighting the potential benefits of alternatives that are sacrificed.