In the context of economic scarcity, if a consumer decides to spend their limited budget on a luxury item instead of saving for future needs, what is the opportunity cost of this decision?

When a consumer chooses to spend their limited budget on a luxury item, they are making a decision based on their wants and needs. Economic scarcity means that resources, like money, are limited, so every choice has a cost. The opportunity cost of buying the luxury item is what the consumer gives up by not saving that money for future needs, such as paying for emergencies, education, or even a necessary purchase. For example, if someone spends $200 on a new smartphone instead of saving it, the opportunity cost could be the ability to buy textbooks for college later on. Understanding opportunity cost helps consumers think carefully about how to use their money wisely.