ECO101H1 Lecture Notes - Opportunity Cost, Decision-Making
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ECO101H1 Full Course Notes
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Document Summary
The economic way of thinking: economic problem: scarcity requires choices, economic decision making: What one forgoes (gives up) by not taking the best alternative action. The opportunity cost of an action is what one forgoes by not taking the best alternative action. 1. the question should i do x? should be replaced by should i do x or y where y is the most highly valued alternative to x? : opportunity cost includes time cost as well as money cost. Examples: you choose to go to a concert, which costs . your next best alternative is to work for 2 hours and earn . Opportunity cost = + = . 1. in 2005, you purchased a bottle of rare wine for . in 2008, you could have sold the wine for . today you could see the wine for .
