21) Opportunity Cost: (pg: 5)•The cost of the explicit (accounting) and implicit resources that are forgone when a decision is made.•It’s the value of the next-best alternative you are giving up plus the dollar value. •Exp.: The opportunity cost of taking this class is the time you are giving up which you could use to earn money in a job, read a book or do whatever is most valuable to you. 22) Explain why a monopolized market does not result in a socially optimal amount of production. (Pg: 294-296, graph 8-16)•When a monopolist enjoys monopoly power, the price he is charging for his product is often higher than the marginal cost of production (P>MC). That means that to the society the product at that price values more than it actually costs to them and they would desire more production. •If the monopolist would produce more, however, he would have to lower the price and therefore loss some profit because the marginal revenue lies below the demand curve.
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