Why are all costs really "opportunity costs"? What is an opportunity cost of attending class?
What will be an ideal response?
An opportunity cost is what must be given up in order to get something else. Although it is convenient to measure many costs in monetary terms, ultimately all costs (some of which cannot be easily measured in monetary terms) are opportunity costs because there is always something that must be given up in order to get something else. An opportunity cost of attending class is the best alternative use of the student's time.
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Suppose Hank spends his entire budget buying 2 bagels and 3 cups of coffee each day. Also, suppose the marginal utility of the second bagel is 100 and the marginal utility of the third cup of coffee is 200
Which of the following statements is TRUE? A) Hank is not maximizing his utility. B) Hank will be maximizing his utility as long as the price of a cup of coffee is twice the price of a bagel. C) Hank might be maximizing utility only if the price of a cup of coffee is less than the price of a bagel. D) Hank is not maximizing utility because he is not buying equal amounts of each good.
Refer to Scenario 1-3. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 400 t-shirts?
A) operating cost B) explicit cost C) marginal cost D) Any of the above terms are correct.