No! Trade-Offs and Opportunity Costs are not same.

Many of us has the misconception that trade-offs and opportunity costs are two different words having similar meanings. But no, it is not. Rather, they are two sides of the coin. In other words, they are inter-related to each other. Let us see the difference between the two:-

Trade-Offs~

Defination-

Trade-Offs is basically the sacrifice that we make to get a certain product or experince. It is when we have to choose any one out of the given alternatives.

Example-

You have a certain amount of money and you have two options, either you can go out for a dinner or you can save the money and go for a picnic during the weekend. Here, you have to choose one out of the two options. So this is a trade-off where you have to either compromise going for the dinner or to the picnic.

Thus, trade-off represents what is renounced,to get what is wanted or desired.

Opportunity~

Defination-

Opportunity cost or alternative cost is the cost of the other best alternatives that we give up while making a choice. In other words, it is the value of choice foregone to get something else. There can be many reasons for losing an opportunity. These are paucity of resources such as money, raw material, capital and so on.

Example-

You get  placed in Delloite with a package of 8 Lakhs per annum and Congnizant with a package of 6 Lakhs per annum. But you chose to work with Cognizant beacuse of the better work environment. So  this 8 Lakhs is the opportunity cost which you lost by not joining Delloite.

Thus, an opportunity cost represents what amount you could have received if you would have chosen the next highest value alternative.