ECON 101 Lecture Notes - Lecture 2: Opportunity Cost
30
ECON 101 Full Course Notes
Verified Note
30 documents
Document Summary
The true cost of something is the most valuable alternative you must give up to get it. Consider alternate uses of costs (money, time, etc. ) Assess choices in relation to best alternative. Opportunity cost vs. out of pocket costs (example: you could study economics all day in the library. Cost: 24 hrs of studying, no financial cost. Benefits: gain knowledge: opportunity cost = time. There is always an opportunity cost: ask yourself what else could i be doing? the or statement. If you are already paying for something and will continue to pay for it in a different scenario, it is not an opportunity cost. Opportunity cost in entrepreneurship: evaluating whether or not to start a business. Start new business or stay at current job. Invest money or leave it in the bank. Ignoring sunk costs: can"t stop now, i"ve already put so much into it , cannot be reversed, consider the next best alternative.
