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Clarifying (Opportunity) Costs

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  • Daniel F. Stone

Abstract

Opportunity cost is widely considered to be a fundamental concept in economics. But the definition of the term continues to be both unclear and controversial. I describe how the term is widely used in two distinct ways, both in academic and non-academic contexts. I propose a practical way for educators to clarify the concept and related terminology.

Suggested Citation

  • Daniel F. Stone, 2015. "Clarifying (Opportunity) Costs," The American Economist, Sage Publications, vol. 60(1), pages 20-25, May.
    • Handle: RePEc:sae:amerec:v:60:y:2015:i:1:p:20-25
    DOI: 10.1177/056943451506000103
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    References listed on IDEAS

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    1. William E. Becker, 2007. "Quit Lying and Address the Controversies: There are No Dogmata, Laws, Rules or Standards in the Science of Economics," The American Economist, Sage Publications, vol. 51(1), pages 3-14, March.
    2. Ferraro Paul J & Taylor Laura O, 2005. "Do Economists Recognize an Opportunity Cost When They See One? A Dismal Performance from the Dismal Science," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-12, September.
    3. Rod O'Donnell, 2010. "Opportunities Lost and Regained in the Land of Opportunity Cost," Working Paper Series 163, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    4. William J. Polley, 2015. "The Rhetoric of Opportunity Cost," The American Economist, Sage Publications, vol. 60(1), pages 9-19, May.
    5. Joel Potter & Shane Sanders, 2012. "Do Economists Recognize an Opportunity Cost When They See One? A Dismal Performance or an Arbitrary Concept?," Southern Economic Journal, John Wiley & Sons, vol. 79(2), pages 248-256, October.
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    Cited by:

    1. Frank G. Sandmann & Julie V. Robotham & Sarah R. Deeny & W. John Edmunds & Mark Jit, 2018. "Estimating the opportunity costs of bed‐days," Health Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 592-605, March.
    2. William J. Polley, 2015. "The Rhetoric of Opportunity Cost," The American Economist, Sage Publications, vol. 60(1), pages 9-19, May.

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