Applying The Cost-Benefit Principle a Opportunity Cost o The value of the next-best alternative that must be forgone to undertake an activity Chapter 1: Thinking Like an Economist Slide 16
MB MC Chapter 1: Thinking Like an Economist Slide 16 Applying The Cost-Benefit Principle ◼ Opportunity Cost ⚫ The value of the next-best alternative that must be forgone to undertake an activity
Applying The Cost-Benefit Principle ■ Assume o The benefit of buying the game downtown is$10 The cost of making the trip is $12 ■ Questions o What is your economic surplus from buying the game downtown? o Where should you buy the game? Chapter 1: Thinking Like an Economist Slide 17
MB MC Chapter 1: Thinking Like an Economist Slide 17 Applying The Cost-Benefit Principle ◼ Assume ⚫ The benefit of buying the game downtown is $10 ⚫ The cost of making the trip is $12 ◼ Questions ⚫ What is your economic surplus from buying the game downtown? ⚫ Where should you buy the game?