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The Rhetoric of Opportunity Cost

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  • William J. Polley

Abstract

A well-known survey of economists revealed that many of them could not correctly answer a basic question on the concept of opportunity cost. In this paper, I connect the concept of opportunity cost to the familiar apparatus of marginal analysis—the equality of prices and marginal rates of substitution at the margin. When opportunity cost is understood this way, it forces one to be clear about units and about the difference between discrete and continuous variables. A more general understanding of opportunity cost can link basic principles-level examples with more advanced technical examples and improve the stories that make up the rhetoric of basic economics instruction.

Suggested Citation

  • William J. Polley, 2015. "The Rhetoric of Opportunity Cost," The American Economist, Sage Publications, vol. 60(1), pages 9-19, May.
  • Handle: RePEc:sae:amerec:v:60:y:2015:i:1:p:9-19
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    References listed on IDEAS

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    1. Krueger, Anne O, et al, 1991. "Report of the Commission on Graduate Education in Economics," Journal of Economic Literature, American Economic Association, vol. 29(3), pages 1035-1053, September.
    2. Colander, David, 2003. "The Aging of an Economist," Journal of the History of Economic Thought, Cambridge University Press, vol. 25(02), pages 157-176, June.
    3. Daniel F. Stone, 2015. "Clarifying (Opportunity) Costs," The American Economist, Sage Publications, vol. 60(1), pages 20-25, May.
    4. Hansen, W Lee, 1991. "The Education and Training of Economics Doctorates: Major Findings of the Executive Secretary of the American Economic Association's Commission on Graduate Education in Economics," Journal of Economic Literature, American Economic Association, vol. 29(3), pages 1054-1087, September.
    5. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    6. 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, Southern Economic Association, vol. 79(2), pages 248-256, October.
    7. William Polley, 2014. "Do students recognize an opportunity cost when they see one? Evidence from introductory economics," Economics Bulletin, AccessEcon, vol. 34(3), pages 1550-1556.
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    Cited by:

    1. Daniel F. Stone, 2015. "Clarifying (Opportunity) Costs," The American Economist, Sage Publications, vol. 60(1), pages 20-25, May.

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