Opportunity cost

This is an important term used in many of the FIA/ACCA papers, however it is sometime not obvious and tend to be ignored in finding the relevant cost.

The definition is the benefit forgone from taking one action instead of another. With this, we can understand the principle underlying opportunity cost, that is "each act of choice involves some sacrifice". Therefore, here is a simple example, let say you have two choices, one is to attend ACCA class for 3 hours and one is to sleep for 3 hours, if you choose to attend the 3 hours class, your opportunity cost is the 3 hours of sleep.

Therefore, you can see that it is not really a difficult thing, you just have to think "if I do this, what I will lose?" then you should be able to find the opportunity cost and include it as part of relevant cost. :)