In the widest sense, the measure of the value of what has to be given up in order to achieve a particular objective. In everyday language, people most often use the term rather like an accountant does, as synonymous with the total money outlays actually paid out to achieve the objective, but this is not precisely what economists mean by the term. Economists are concerned with rational decision-making, and the rational decision-maker needs to estimate in advance the full range of consequences of each of the various alternative uses of his time and resources open to him, not just the portion of the costs accounted for by money outlays. For the economist, the true cost of any decision is the value of the next best outcome (of all the other possible outcomes) that is given up because of that decision. Unless otherwise specified, when economists say "cost," they mean opportunity cost -- that is, the highest valued alternative that must be sacrificed to attain something or otherwise satisfy a want. For example, the opportunity cost of a spur-of-the-moment decision to go to the movies Tuesday afternoon instead of going in to work is not just the six dollars for the ticket plus the gasoline and wear and tear on the car to get there. It also includes (at least) the four hours' wages not earned, diminished prospects for being promoted at work, and possibly such additional consequences as future hostility from co-workers who had to take up the slack, unpleasant feelings of guilt or shame, and so on. In a more extreme vein, the opportunity cost of committing suicide is not simply the money outlay for the necessary equipment, but rather the value of the total range of future satisfactions one might otherwise be able to achieve.
[See also: transaction costs]