Economics 200 - Ch. 2 Notes

Economics 200 - Ch. 2 Notes - Econ 200 Ch. 2 Notes Choice...

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Econ 200 Ch. 2 Notes Choice and Opportunity Cost Opportunity Cost – the value of the best alternative that is forgone (opportunity lost). Refers to a person’s selected lifestyle, and how much they decide to spend. Ex. – Cost of college (room and board, clothes, which college you chose to attend, etc.) -Analysis of choice and opportunity depends on your view of college (what fits your lifestyle) -College is not for everyone (depends on what your personal goals are) Opportunity Cost is Subjective -Economist assume that people choose the most valued alternative -Learning about alternatives is costly and time consuming, so you must make the right choice -If you pursue one activity, you may not have time to pursue something else (each activity involves an opportunity cost) -Opportunity cost depends on your alternatives (study on Tuesday night equals has lower opportunity cost instead of a Friday night) -Opportunity cost is subjective, but in some cases, money paid for goods and services is a reasonable approximation. -Even religious practices are subject to opportunity cost (US religious services attendance/week) - Sunk cost – a cost that has already been earned and cannot be recovered regardless of
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This note was uploaded on 04/17/2008 for the course ECON 200 taught by Professor Newton during the Spring '08 term at Ohio State.

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Economics 200 - Ch. 2 Notes - Econ 200 Ch. 2 Notes Choice...

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