ECON 200 Lecture Notes - Lecture 2: Gelato, Opportunity Cost, Capital Good

• School: University of Arizona
• Department: Economics
• Course: ECON 200
• Professor: Dirk Mateer

Document Summary

Opportunity cost - the highest-valued, next-best alternative that must be sacrificed to attain something or satisfy a want. Consider the true costs of traveling from tucson to san diego by plane or bus. The bus ticket costs: and takes 20 hours r/t. The plane costs: and takes 4 hours r/t. You value your travel time at an hour. Shows the maximum amount of any two products that can be produced from a fixed amount of resources. Opportunity cost is only 2 servings of gelato. Opportunity cost is 23 servings of gelato. (master gelato makers had to stop making gelato and start making pizza) . Notice: the ppc is non-linear, this is known as the law of increasing relative cost. The pcc in nonlinear, this is known as the law of increasing relative cost. Consumer goods - goods produced for personal satisfaction. Capital goods - goods used to produce other goods.