4.1 Social and Opportunity Cost - Social Cost and Opportunity Cost Estimating Costs Estimating Costs Social Costs The most comprehensive and

4.1 Social and Opportunity Cost - Social Cost and...

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Social Cost and Opportunity Cost Estimating Costs Estimating Costs
Social Costs The most comprehensive and appropriate measure of the costs in a benefit-cost analysis for any policy action is social cost . Social cost represents the total burden on those with standing. In a regulatory context, it can be defined as: the sum of all opportunity costs incurred as a result of the regulation.” - EPA. (2010). Guidelines for Preparing Economic Analyses. Estimating Costs
Opportunity Cost The value of the next-highest-valued alternative use of that resource Examples: Playing tennis vs. reading a book Going to class vs. enjoying the summer If an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose that the asset could have been used for. Estimating Costs
Example You won a free ticket to see Imagine Dragons in concert, but you may not give the ticket away or resell it, so it has no resale value. The average ticket price for their tour is $120.

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