ECON 1001 Lecture Notes - Lecture 1: Opportunity Cost, Negative Number
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Opportunity cost: what you gi(cid:448)e up to get so(cid:373)ethi(cid:374)g else (cid:894)o(cid:374)ly (cid:373)akes se(cid:374)se if there"s s(cid:272)ar(cid:272)ity(cid:895, formal definition: the benefit given up by not using resources in the best alternative way. In many real and practical examples, you try to figure out what the opportunity cost is (cid:271)ut you ha(cid:448)e to figure out (cid:449)hat else you (cid:272)ould ha(cid:448)e do(cid:374)e, (cid:271)ut of (cid:272)ourse you did(cid:374)"t do it. It is quite difficult to apply the thought of opportunity cost: economist disagree on the best alternative use, suppose that you have on you to buy muffins and coffee. Muffins are and coffee costs a cup. Answer is muffin per coffee: opportunity cost of a coffee is the recipricol of a muffin!!!!! Possible: can be produced with the resources that the economy has and the technology it has. Anything on or below the line are possible options to spend the money. This is how the negative slope comes into play.
