ECN E101 Lecture 2: ECN E101 Class 2
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The cost of an item is its opportunity cost. There is no such thing as a free lunch! . It may be free from an accounting costs (you may not have paid anything); but there was an economic cost (it using up resources) In order to produce the hamburger, you had to use up resources. The opportunity cost is not the sum but based on the next best activity. Suppose that you are studying for your economics final and you are confronted with the choice to go to the movies with your friends. The opportunity cost of going to the movies is the value placed on studying. This could be valued at the change in grade from study or forgone future earnings. The cost of possible retaking the class are now considered. The opportunity cost of studying economics is the value of going to see the movie. It could be valued at the ticket price.
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