Ans: It is an implicit cost that represents the foregone potential gains of the next best alternative. Suppose you have completed your graduation and are in a dilemma about whether to go for Masters or take up a job, and you receive a job offer with an annual pay scale of Rs.5 lakh. However, you decide to pursue Masters and forgo the job. Therefore, the opportunity cost of doing a master's would be equivalent to Rs.5 lakh.