What does the concept of opportunity cost refer to when considering production possibilities?

Opportunity cost is the idea that when you choose one option, you give up the chance to do something else. In the context of production possibilities, it means that when a country or a company decides to produce more of one good, it has to produce less of another good because resources are limited. For example, if a farmer decides to grow more corn, he might have to reduce the amount of wheat he grows. This trade-off illustrates the opportunity cost of choosing corn over wheat, which is the wheat he could have produced. Understanding opportunity cost helps people make better decisions about how to use their resources effectively.