ECON 2000 Chapter : ECONCH1 Brown
Document Summary
Opportunity cost is the best alternative that we forgo, or give up, when we make a choice or decision. Definition: value of what you give up in an economic activity or decision. Another definition: the value of the next best use of resources used. Example: you have a ticket that you bought for for a concert that you can sell for . What do you give up? the 100 dollars. Do not pay attention to sunk costs . You already paid for the ticket, so do not pay attention to. If you add opportunity cost to revenue, you get economic profit revenue - economic cost. Opportunity costs occur because resources are scarce (limited relative to overall need or desire- aka time is scarce) Example: water in south la vs. southern california. In cali, water is scarce - they pay by how much they use. Here, it is not rare at all. Names of people (i. e. newtonian mechanics, euclidian.
