Opportunity cost is a microeconomic concept used to describe how much an economic agent fails to earn in one economic activity by employing money in another economic activity. For example, if a business owner is in doubt between investing in a factory or in stocks. The opportunity cost of investing in a factory is the value the entrepreneur fails to earn in the financial market. And vice versa. If Paul donates his money, he makes a choice to give up all the value that money could bring to his leisure and finances. This is the opportunity cost of giving.
