You have 1000 Rs and you decided to investing family business rather than depositing it in a bank where you can get the interest of 5%.  What is the amount of foregone interest from the bank called in terms of cost ?

opportunity cost

The correct answer is Option 1: opportunity cost

• Opportunity cost refers to the value of the next best alternative foregone when making a choice.
• In this case, by investing Rs. 1000 in the family business, you forgo the Rs. 50 interest you could have earned from the bank.
• This lost interest is the opportunity cost of your decision.