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A discussion of opportunity costs

Master Card has a series of cute commercials that list a series of accounting items and costs leading to a priceless product. Cell phones are often advertised as being free. In economics, it is said that nothing of value is either free or priceless, everything has a price. Take something from your experience, that is allegedly free or priceless and use the concepts of accounting costs, economic costs, explicit costs, implicit costs, opportunity costs and sunk costs to explain why it is neither priceless nor free.

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This is a classic question that gets at the idea of opportunity cost. Suppose that I got a free ticket to the Sunday afternoon football game in Seattle. 50 yard line seats nonetheless! How I get the ticket is not important. I may have signed up for a credit card, or filled out a survey. My first ...

Solution Summary

The following is a discussion of opportunity cost. The narration demonstrates how in economics even things that are advertised as free actually are not. It covers the concepts of accounting vs. economic costs, explicit vs. implicit costs, opportunity and sunk costs.