If a student decides to spend an evening studying for an economics exam instead of working a part-time job, what is the opportunity cost of their decision?

Opportunity cost is the value of the next best alternative that is given up when making a choice. In this case, the student’s next best alternative is the part‑time job they could have worked instead of studying. Therefore, the opportunity cost is the wages they would have earned from that job. For example, if the job pays $10 an hour and they could have worked 20 hours, the opportunity cost would be about $200. Thus, the student’s decision to study means they forgo earning that amount.