Difference between Opportunity Cost and Money Cost
Opportunity cost which is also known as the real cost or true cost refers to the sacrifice made in order to satisfy a want, using a given unit of resources. It is also refers to the want that is left unsatisfied in order to satisfy another more pressing want.
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Money cost on the other hand, refers to the amount of money paid for a particular item. For instance, a student in a Nigerian university has ₦1000 and has two pressing wants of buying a textbook and a shirt which costs ₦1000 each. The student has to choose to buy one of the commodities at the expense of the other as a result of his limited available resources (money) used in satisfying his wants.
If the student decides to buy textbook and forgo the shirt, therefore ₦1000 is the money cost of the textbook while the opportunity cost of the textbook is the shirt which he failed to buy with the same money – the forgone alternative.
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