Chapter 1-2: Opportunity Cost
Trade-off - all the alternatives we give when making a choice.
- Individuals- study or watch TV?
- Business- make tables or chairs?
- Society- guns or butter? (military or consumer goods)
Opportunity Cost – the “cost” of the next best alternative not chosen
Ex. - the opportunity cost of taking a 1st period class is an extra hour of sleep
Decision making grid - compare costs and benefits
Every decision has opportunity costs, which can change.
Thinking at the margin - using/doing one more/less thing
- Consider the opportunity cost of one more thing.