Opportunity cost is defined as the value of the next best alternative forgone.
What do we mean by value? I think I’d best understand with an example: Suppose I have two only options buying a mobile phone or TV, let’s say that the mobile phone costs 450 dollars and the TV costs 1000 dollars what is the opportunity cost of buying the mobile phone? Now the cost of the TV is 1000 dollars, is that it’s value? If by value one means the amount I would place on the TV then isn’t the question unanswerable?(My book does not seem to think so.)
Assuming the above question is unanswerable and that I value the TV at 500 dollars is that the opportunity cost of the TV or is it 500-1000=-500?