Manon's Econ Blog

Opportunity cost

Posted on: August 27, 2009

To make the choice of going somewhere or doing something, you have to:
  •  define the benefit/utility (if someone gives me X$ for it, will I still go?)
  • find the opportunity cost (costs of all activities I would do if I was not going)
  • If the benefit is higher than the opportunity cost, then I will go
  • If the benefit is lower than the opportunity cost, then I will not go

 

The utility changes from one person to another because we all have different tastes, expectations, limits…

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