Opportunity cost
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Opportunity cost is the value of the next best thing after making a decision.[1] The idea of an opportunity cost was first begun by John Stuart Mill.[2] The utility has to be more than the opportunity cost for it to be a good choice in economics.
In other words, opportunity cost is how much leisure time we give up to work. Because leisure and income are both valued, we have to decide whether to work, or do what we want. Going to work implies more income but less leisure. Staying at home is more leisure yet less income.
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- ↑ McConnell, Campbell; Stanley L. Brue (2005). Microeconomics: Principles, Problems, and Policies. McGraw-Hill Professional. pp. 27. ISBN 0072875615. http://books.google.com/books?id=hlwqualKNjEC&printsec=frontcover#PPA27,M1.
- ↑ Stigler, George S., "The Nature and Role of Originality in Scientific Progress." Economica, Vol. XXII (November, 1955)
