Opportunity costs are the concepts of forgone alternatives. Any choosen action is assumed to have "won out" over other actions which were in the choice set. By thus minimizing opportunity costs the economic agent can maximize return to action (where return is Economic Profit defined as Total Revenue minus Total Costs).
Costs – The true social Costs of using resources to produce a commodity “X” (a unit of this quanity) is the number of units of Y that have to be sacrificed.
- Explicit: resources that have to be purchased – land, labor, capital
- Implicit next best alternative of the Entrepreneur