It seems to me there that the most common definition of opportunity cost in economics is that opportunity cost is the net benefit of the next best alternative forgone. (See this question: What is Opportunity Cost?)
Did I interpret that correctly? Or is the definition of opportunity cost different?
So I’m going to guess that the purpose of an opportunity cost is to make a rational decision, by choosing the option with a lower opportunity cost. Is that line of reasoning correct?
Assuming that the above is indeed the most accepted definition of opportunity cost, how would one solve a problem like this which is in fact given in my textbook: I can buy a Tractor or TV a Tractor costs 5000 dollars while a TV costs 1000 dollars, assuming these are the only two options I can undertake what is the opportunity cost of buying a tractor?
Now per the above definition I would have to calculate the net benefit I would get by buying the TV, what’s this benefit? Isn’t it unanswerable?
Something similar occurs when discussing comparative advantage(perhaps I’m conflating macro and micro but why should the concept be different?). Specifically say I calculate that if I produce 1 Ton of Tea I’d have to forgo 0.2 Tons of wool. Shouldn’t may opportunity cost of producing 1 Ton of Tea be the net benefit I would have gotten by producing wool? According to Wikipedia and my textbook the answer is simply 0.2 Tons of wool. Which in my opinion makes no sense. (Imagine a fictional world where wool is completely useless shouldn’t the opportunity cost be negative?)
Either the textbook is extremely wrong or I am extremely confused.