Opportunity Cost (Elementary)
Opportunity cost is an economic concept that refers to the cost of an alternative that must be forgone in order to pursue a certain action. It is the cost of the next best alternative that is not chosen. Opportunity cost is an important concept in economics and decision-making because it helps to determine the most efficient use of resources. It is also used to compare the cost of different options and to determine the best course of action.
History of Opportunity Cost
The concept of opportunity cost was first introduced by the Austrian economist Friedrich von Wieser in the late 19th century. He argued that the cost of an action should include the cost of the next best alternative that is not chosen. This concept was later developed by the American economist Frank Knight, who argued that the cost of an action should include the cost of the next best alternative that is not chosen, as well as the cost of the next best alternative that is chosen. This concept has since become an important part of economic theory and decision-making.
Comparison Table
| Option | Opportunity Cost |
|---|---|
| Option A | $100 |
| Option B | $200 |
Summary
Opportunity cost is an economic concept that refers to the cost of an alternative that must be forgone in order to pursue a certain action. It is an important concept in economics and decision-making because it helps to determine the most efficient use of resources. For more information about this term, you can visit websites such as Investopedia, The Balance, and Khan Academy.
See Also
- Marginal Cost
- Marginal Benefit
- Marginal Utility
- Marginal Revenue
- Cost-Benefit Analysis
- Sunk Cost
- Explicit Cost
- Implicit Cost
- Fixed Cost
- Variable Cost
