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Opportunity cost, In economic terms, the opportunities forgone in the choice of one expenditure over others. For a consumer with a fixed income, the opportunitycostof buying a new dishwasher might be the value of a vacation trip never taken or several suits of clothes unbought. The concept of opportunity cost allows economists to examine the relativemonetaryvalues of various goods and services.

This article was most recently revised and updated byJeannette L. Nolen, Assistant Editor.

utility and value: Resource limitations and allocation

wants of the community, this opportunity cost must ultimately be taken into account.

also introduced the concept of opportunity cost: Wieser showed that the cost of a factor of production can be determined by its utility in some alternative usei.e., an opportunity forgone. The concept of opportunity cost, as identified by Wieser, is still widely used in modern economic analysis.

the differences in the relative opportunity costs (costs in terms of other goods given up) of producing the same commodities among countries. In Ricardos theory, which was based on the labour theory of value (in effect, making labour the only factor of production), the fact that one country could produce

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The Library of Economics and Liberty – Opportunity Cost

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