ECO100Y1 Study Guide - Final Guide: Sunk Costs, Marginalism, Opportunity Cost
Document Summary
Economics study of how rational people make choices. The opportunity cost of an action is what one forgoes (gives up) by not taking the best alternative action. The question should i do x? should be replaced by. Should i do x or y where y is the most highly value alternative to x ? . Opportunity cost includes time cost as well as money cost. The opportunity cost of attending university for 1 year. If the best alternative is fulltime work at k. If the best alternative is fulltime work at k. No, if student would have to pay for room and board if working full-time. If the best alternative is working at a part time job at per hour, the op. cost is: If the best alt. is going for a walk then the opt cost: Stisfaction from walk: monetary value exceeds by implication. Dinner at a favorite restaurant, which you value at (2h)
