Economics

Milton Friedmans expression of Theres no such thing as opportunity cost rightly sums up the concept of opportunity cost. It demonstrates that any and every event that occurs has a next best alternative that could or would have occurred instead if the said event didnt take place.

Taking forward the analogy of a free lunch, we can look at it this way if someone is taking us for a free lunch today, either someday we will be obliged to pay him back for this lunch in some way or the other, or else we will be missing out on some opportunity meanwhile. This is where the concept of opportunity cost becomes more relevant.

For eg if x is spent to buy a machine, the opportunity cost is the interest that could have been earned on x if it had been invested or the other benefits that could have been gained by spending that amount of money on something else. In fact, even if that x was to remain idle and unused, even that has an opportunity cost the interest that could have been earned by investing it in some funds, or the revenue that could have been generated by investing it in an asset, etc. Or as Investopedia explains, ifagardener decides to grow carrots, his her opportunity cost is the alternative crop that might have been grown instead (potatoes, tomatoes, pumpkins, etc.).

In the same way, a free lunch today will always have an opportunity cost whether the opportunity cost occurs today, or tomorrow.  Hence Milton Friedmans words describe the concept wonderfully and do full justice to it.