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Lec9 - Lecture 9 Cost concepts ECONOMIC COSTS o Why do...

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Lecture 9: Cost concepts ECONOMIC COSTS o Why do costs exist? Because of scarcity we have to make a choice. Any time we make a choice we incur a cost. MAXIMS COSTS o Costs belong to actions – not things. Pen doesn’t have a cost. A choice of choosing plastic to make pen cost opportunity. ( decide to produce a pen) o Costs are caused by making a choice. o No impersonal costs-somebody will pay for something – costs are costs to persons ( people)? o Costs always lie in the future-if costs are caused by making choices-making the choices of the past. We can’t control the future. o What you paid for something should have no influence – no effect – on how you use it. Pay in advance- when you go to health club – what does it cost you each time you don’t go to health club? What is the 400$ once you signed the contract and gave it to the club. $ 9.00 –sunk cost – when he bought the record now its relavance o $3.00 45rpm $1.50 o $3.00 o $3.00 $4000 for the motor cycle o FOR SALE BEST OFFER $2500 $ 70 ticket x 2 = $140 boring tickets. Choice to either stay or to go. $140 choice paid has no influence on you . You only control future choices not the
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