Podcast
Questions and Answers
What is opportunity cost?
What is opportunity cost?
The value of the next best alternative forgone
Explain the difference between explicit and implicit costs.
Explain the difference between explicit and implicit costs.
Explicit costs require a money payment, while implicit costs do not require a money payment.
How does opportunity cost help explain the decisions of star athletes regarding college?
How does opportunity cost help explain the decisions of star athletes regarding college?
The opportunity cost for star athletes includes the potential earnings they could make as professionals instead of attending college.
Why do economists use opportunity costs to understand the behavior of firms and individuals?
Why do economists use opportunity costs to understand the behavior of firms and individuals?
Give an example of an explicit cost related to attending college.
Give an example of an explicit cost related to attending college.
What is an implicit cost in the context of attending college?
What is an implicit cost in the context of attending college?
Define scarcity.
Define scarcity.
Explain the concept of opportunity cost.
Explain the concept of opportunity cost.
What does Milton Friedman mean by 'there is no such thing as a free lunch'?
What does Milton Friedman mean by 'there is no such thing as a free lunch'?
How does scarcity relate to the concept of opportunity cost?
How does scarcity relate to the concept of opportunity cost?
Differentiate between accounting profits and economic profits.
Differentiate between accounting profits and economic profits.
Explain why accounting profits and economic profits are not the same.
Explain why accounting profits and economic profits are not the same.
What is the main difference between opportunity costs and explicit costs?
What is the main difference between opportunity costs and explicit costs?
Why do accountants not include implicit costs in their calculations?
Why do accountants not include implicit costs in their calculations?
How does the concept of opportunity costs impact decision-making for firms and individuals?
How does the concept of opportunity costs impact decision-making for firms and individuals?
Using the example of Farmer Jones, explain why his economic profit is lower than his accounting profit when planting wheat.
Using the example of Farmer Jones, explain why his economic profit is lower than his accounting profit when planting wheat.
How does hiring a laborer to plant wheat impact Farmer Jones's economic profit?
How does hiring a laborer to plant wheat impact Farmer Jones's economic profit?
What is the significance of understanding opportunity costs in economic decision-making?
What is the significance of understanding opportunity costs in economic decision-making?
