Opportunity Cost and the Sunday Papers
Articles in the Sunday papers may not have referred to opportunity cost but it was everywhere.
Do you agree that judges should know the dollar cost of a prison sentence? Is it good or bad that dishwasher detergents have become less effective because of environmental legislation? Should climate change be left to Congress or the courts? Does it matter that the FDA will not tell us at food counters that salmon has been genetically modified? You could use opportunity cost analysis to decide.
The Economic Lesson
The opportunity cost of a decision is the next best alternative that was sacrificed. Doing opportunity cost analyis involves looking at the benefits of the decision and the benefits of the sacrificed alternative. Only then can we really know whether we are willing to do without the benefits of what we decided not to do.