Economic- opportunity costs free essay sample

Opportunity cost refers to what you have to give up to buy what you want in terms of other goods or services. When economists use the word cost, we usually mean opportunity cost. The word cost is commonly used in daily speech or in the news. For example, cost may refer to many possible ways of evaluating the costs of buying something or using a service. Friends or newscasters often say It cost me $150 to buy the iPhone I wanted. Definitions and Basics Opportunity Cost, from the Concise Encyclopedia of Economics When economists refer to the opportunity cost of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you cant spend the money on something else. If your next-best alternative to seeing the movie is reading the book, then the opportunity cost of seeing the movie is the money spent plus the pleasure you forgo by not reading the book. We will write a custom essay sample on Economic- opportunity costs or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Getting the Most Out of Life: The Concept of Opportunity Cost, by Russ Roberts on Econlib To get the most out of life, to think like an economist, you have to be know what youre giving up in order to get something else. Sometimes people are very happy holding on to the naive view that something is free. We like the idea of a bargain. We dont want to hear about the hidden or non-obvious costs. Thinking about foregone opportunities, the choices we didnt make, can lead to regret. Choosing this college means you cant go to that one. Marrying this person means not marrying that one. Choosing this desert (usually) means missing out on that one. Opportunity Cost, a LearnLiberty video. Prof. Don Boudreaux explains what economists mean when they talk about unintended consequences. Opportunities and Costs, by Dwight Lee. At CommonSenseEconomics. com. PDF file at CommonSenseEconomics. com first published in The Freeman Economics has been called the dismal science because it studies the most fundamental of all problems, scarcity. Because  of scarcity we all face the dismal reality that there are limits to what we can do. No matter how productive we become, we can never accomplish and enjoy as much as we would like. The only thing we can do without limit is desire more. Because of scarcity, every time we do one thing we necessarily have to forgo doing something else desirable. So there is an opportunity cost to everything we do, and that cost is expressed in terms of the most valuable alternative that is sacrificed. In the News and Examples Opportunity cost, rock concerts, and grades: A Fable of the OC, by Mike Munger on Econlib. You get to the box office about midnight, but dont sleep much because its noisy. Finally, sleep does come. It only seems like a few minutes later when the clank of the ticket window opening wakes you at 8:00 am. In the sunlight, you notice that there are way more people in line than you thought. Thousands, in fact. You may not get tickets, even after camping out But you start thinking about opportunity cost, the big OC. You recall from economics class that the OC is about foregone alternatives. In other words, the cost of doing one thing is all the other things you dont get to do as a result. I used this fable (sort of—it was Bruce Springsteen then) as a test question in my intermediate Microeconomics class at Dartmouth College. Biggest cost of college is what students could otherwise earn by working: Human Capital, by Nobel Prize winner Gary Becker in the Concise Encyclopedia of Economics Tuition and fees are not, for most college students, the major cost of going to college. On average, three-fourths of the private cost of a college educationthe cost borne by the student and the students familyis the income that college students give up by not working. A good measure of this opportunity cost is the income that a newly minted high school graduate could earn by working full-time. During the 1980s and 1990s, this forgone income rose only about 4 percent in real terms. Therefore, even a 67 percent increase in real tuition costs in twenty years translated into an increase of just 20 percent in the average students total cost of a college education.