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Opportunity Cost. The price of what you did not choose.
Front
Money SenseGL-00018
Opportunity Cost
The price of what you did not choose
The value of the best thing given up to get something else.
GeekLibraryRule
Back
GL-00018Rule
When you spend 200 rupees on a movie, the cost is not 200 rupees. It is whatever else you would have done with that money and those three hours. Economists see every choice as two: the thing you picked and the thing you gave up. Nothing is free, because everything costs time.
- Every hour has an opportunity cost. Studying for an exam costs the hour you could have spent playing.
- Before any decision, ask: what am I giving up? That is the real price.
SourceBuchanan, Cost and Choice (1969)
Mankiw, Principles of Economics
Mankiw, Principles of Economics
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