Opportunity cost refers to the value of the next best alternative forgone when making a choice or decision. It is a fundamental concept in economics that arises due to the scarcity of resources. When individuals or societies make choices, they incur opportunity costs by giving up alternative options. For example, if a country decides to allocate its resources to producing more healthcare services, it may incur the opportunity cost of fewer resources available for education or infrastructure. Understanding opportunity cost helps in evaluating trade-offs and making efficient resource allocation decisions.