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LESSON 1.3 Opportunity Cost and Choice

Objectives. LESSON 1.3 Opportunity Cost and Choice. Define opportunity cost. Evaluate guidelines for making choices. Analyze the opportunity cost of attending college. Key Terms. LESSON 1.3 Opportunity Cost and Choice. opportunity cost sunk cost. Opportunity Cost.

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LESSON 1.3 Opportunity Cost and Choice

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  1. Objectives LESSON 1.3 Opportunity Cost and Choice Define opportunity cost. Evaluate guidelines for making choices. Analyze the opportunity cost of attending college. CONTEMPORARY ECONOMICS: LESSON 1.3

  2. Key Terms LESSON 1.3 Opportunity Cost and Choice opportunity cost sunk cost CONTEMPORARY ECONOMICS: LESSON 1.3

  3. Opportunity Cost • The opportunity cost of an item or activity is the value of the best alternative you must pass up. CONTEMPORARY ECONOMICS: LESSON 1.3

  4. Opportunity Cost • Nothing better to do? • Estimate opportunity cost • Opportunity cost varies CONTEMPORARY ECONOMICS: LESSON 1.3

  5. Choose Among Alternatives • Calculate opportunity cost • Time—the ultimate limitation • Ignore sunk cost • Sunk cost is a cost you have already incurred and cannot recover. CONTEMPORARY ECONOMICS: LESSON 1.3

  6. The Opportunity Cost of College • Forgone earnings • Direct costs of college • Other college costs • Other-things-constant assumption CONTEMPORARY ECONOMICS: LESSON 1.3

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