Which term refers to the loss of potential gain from choosing one alternative over another?

Opportunity cost refers to the potential gain that is lost when one alternative is chosen over another. This concept is fundamental in decision-making, particularly in business analysis, as it helps in evaluating the relative benefits of different options. When considering a choice, the opportunity cost encourages analysis of not just the immediate benefits of the selected option but also the value of the next best alternative that is being foregone.

In a business context, understanding opportunity cost allows stakeholders to better assess investments, initiatives, and projects by considering what might be sacrificed in terms of resources, time, and potential revenue. For example, if a business chooses to invest in one project, the opportunity cost would be the returns that could have been generated from an alternative project that was not pursued.

Other terms presented in the question relate to different concepts. Sunk cost refers to costs that have already been incurred and cannot be recovered, making them irrelevant for future decision-making. Backlog management involves overseeing an accumulation of tasks or items that need attention, primarily in the context of project management or product development. A business case is a document that justifies a project or investment decision, detailing its benefits, costs, and impacts.

Grasping the concept of opportunity cost is crucial for effective business analysis, as it