Explain the relationship between opportunity costs and money costs. Can they be treated as identical?
What will be an ideal response?
The two costs are usually closely tied because of the way in which a market economy sets prices. If the market functions well, goods that have high opportunity costs will also have high money costs. In turn, goods that have low opportunity costs will also have low money costs. However, it would be a mistake to treat opportunity costs and explicit monetary costs as identical. For one thing, sometimes the market does not function well, and hence assigns prices that do not accurately reflect opportunity costs.
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Indicate whether the statement is true or false
If Juana contracts to buy U.S. office equipment in U.S. dollars and her domestic currency depreciates against the U.S
dollar between the time the contract is signed and the bill is paid, she will wind up paying less for the equipment because she stayed in the spot market. Indicate whether the statement is true or false