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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. 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 1-14, September.
    2. 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.
    3. William J. Polley, 2015. "The Rhetoric of Opportunity Cost," The American Economist, Sage Publications, vol. 60(1), pages 9-19, May.
    4. 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.
    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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