The idea of opportunity cost is one of the single most important concepts in modern economics. Basically, the opportunity is the single next best decision you could make – it represents what you are giving up with any decision.
For example, if you spend $5 to buy a sandwich, the opportunity cost would be the next best thing you could do with the $5 (saving it, buying a chocolate sundae, etc). By recognizing opportunity costs in your life, you can make significantly more optimal and objective decisions. This video illustrates the concept in the context of finance, investments, and your day-to-day life.