Read the Transcript that shows how the relationship between the concept of opportunity cost, production and exchange (or trade) called, What is Opportunity Cost. Transcript What is Opportunity Cost? What is opportunity cost? Opportunity cost refers to the value a person could have received but passed up in pursuit of another option. So if you were to wait in line for free ice cream, you actually give up the opportunity to do something else with your time, like working at a job or reading a book. So that ice cream really isn't free. Economists even use the concept of opportunity cost to determine if people can benefit from trading with one another. Let's look at a simple example -- just two people, Bob and Ann, who produce just two goods, bananas and fish. Because of the concept of opportunity costs, Ann and Bob are worse off when they try to do everything themselves. Here's what Bob can do if he spends all of his time producing only one good. Bob can either gather 10 bananas, or he can catch 10 fish. And Ann can either gather 10 bananas or catch 30 fish. Bob has to choose to gather bananas or