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Opportunity cost is the value of the best alternative forgone when a choice is made between several mutually exclusive alternatives. Learn about explicit, implicit, sunk and marginal costs, and how they affect economic decisions and efficiency.
The marginal opportunity costs of guns in terms of butter is simply the reciprocal of the marginal opportunity cost of butter in terms of guns. If, for example, the (absolute) slope at point BB in the diagram is equal to 2, to produce one more packet of butter, the production of 2 guns must be sacrificed.
Marginal cost is the change in total cost that arises when the quantity produced is increased. It depends on the variable costs, the fixed costs, and the productivity of the inputs. Learn more about marginal cost concepts, formulas, and examples.
Diminishing returns are the decrease in marginal output of a production process as the amount of a single factor of production is increased. Learn the history, theory, examples and applications of this economic concept from Wikipedia.
Marginalism is a theory of economics that explains the value of goods and services by their marginal utility, or the additional satisfaction they provide. It also applies to marginal physical productivity, marginal rates of substitution, and marginal changes in constraints.
Think of marginal opportunity costs as forgone benefits or a sunk cost of time or money compared ... Opportunity Cost Examples. Opportunity cost can also be considered as the value of the resource ...
Comparative advantage is the advantage over others in producing a particular good at a lower relative cost or price. Learn how David Ricardo developed the classical theory of comparative advantage to explain international trade and its benefits.
A marginal benefit is a benefit (howsoever ranked or measured) associated with a marginal change. The term “marginal cost” may refer to an opportunity cost at the margin, or more narrowly to marginal pecuniary cost — that is to say marginal cost measured by forgone cash flow. Other marginal concepts include (but are not limited to):