Shoes vs. Socks: Opportunity Costs

Opportunity costs are the goods and services that won't be produced from a given set of resources because these resources were used to produce some other goods and services. The operative word here is other.

When you live in a world where there are not enough resources to produce everything that everyone wants, then all resources have competing alternatives or other uses. If a given set of resources is used to produce shoes, then it can never be used to produce socks. The opportunity cost for the community, once resources are used to produce shoes, is the sock or other goods and services that can never be produced by these same resources.