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chapter 2 - Chapter 2 Scarcity Choice and Economic Systems...

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1 Chapter 2: Scarcity, Choice and Economic Systems
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2 Opportunity Cost How do we decide about the cost of a good/service? – Money? – Economist: Money is a part of its cost – Opportunity Cost: most accurate and complete concept of cost The opportunity cost of any choice is what we must forgo when we make that choice – that is: the money (or time) could have been used for other things that we value. - In a different way, true cost of any choice we make - Everything we actually sacrifice in making the choice.
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3 Opportunity Cost and Individuals The opportunity cost of a choice is the best among the available alternatives to that choice (ex: Reading two chapters from textbook) Many choices: Large part of the money paid is opportunity cost Direct money cost of a choice may only be a part of opportunity cost of that particular choice
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