Economics: Can opportunity cost be zero?

[fyleow]

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[slydecix]

there's no free lunch

 

[mchammer187]

no opportunity cost is still the cost that it had to produce

take this example I have a 30K job

I have to GIVE UP the job to be promoted a higher position in which I still do the same thing pretty much

the opportunity cost is what you gave up essentially the 30K job

to get the 50K job

if I was jobless and assuming my time had zero value before and then was offered a job @ 50K then the opportunity cost would essentially be zero (this is never the cast tho because in the real world your time has some value however small it my be)

so only if you had zero output would there be no opportunity cost

 

[theNEOone]

opportunity cost is never zero. "zero opportunity cost" can be shown in a PPF graph, but it's not feasible.


=|

 

[Ikonomi]

Originally posted by: Elitebull
there's no free lunch

The one phrase I remember from my economics classes. And true, too.

 

[fyleow]

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[mchammer187]

Originally posted by: fyleow
I asked my friend and this is what he had to say:

[23:21] x: you know the ppf graph?
[23:21] fyleow: right
[23:21] x: on all points of graph,
[23:21] x: we're giving the same effort (same amount of resources to work with)
[23:21] x: so wherever you are,
[23:21] x: the amount of resource that is used up is the same
[23:22] x: so if you're producing 3 corns when you can actually produce 5
[23:22] x: and you decide to produce one more,
[23:22] x: you're not taking out any more resources
[23:22] x: just being more efficient.
[23:22] x: now the ppf represents the maximum efficiency
[23:22] x: so if you're already there and you want to make more corn,
[23:22] x: you have to sacrifice in steel or whatever
[23:22] x: 'cuz you can't get efficient in corn alone anymore
[23:23] x: is this understandable?

I personally think that if you can produce 5 corn but you're only producing 3 and you become more efficient, then the opportunity cost is 3. You gave up the production of 3 corn to go to 5. So who is right here?

you are
what if your efficiency technique fails and no you can produce 0

you risked 3 to try to get 5

5 was by no means a guarantee you risked your opportunity to get 3 to get to 5

if you risked nothing than you should be able to produce 3 + 5 which is 8

 

[opticalmace]

Originally posted by: Ikonomi

Originally posted by: Elitebull
there's no free lunch

The one phrase I remember from my economics classes. And true, too.

Then explain my panini.

 

[opticalmace]

By the way...

Without looking at PPF graphs and such, try to think about the concept.

No matter what you do, you could have done something else.
I could be finishing my cover letter right now instead of posting on ATOT, for example.

Because you can not attempt every endeavor at the same instant in time, you must choose one instead of another. The time spent doing one and not the other has a cost; you could have spent it doing the other, but then the same situation arises.

There will always be a cost to your actions, padowan.

 

[fyleow]

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[kt]

Originally posted by: opticalmace

Originally posted by: Ikonomi

Originally posted by: Elitebull
there's no free lunch

The one phrase I remember from my economics classes. And true, too.

Then explain my panini.

It means nothing is free in this world.

 

[Dissipate]

Originally posted by: mchammer187


if I was jobless and assuming my time had zero value before and then was offered a job @ 50K then the opportunity cost would essentially be zero (this is never the cast tho because in the real world your time has some value however small it my be)

so only if you had zero output would there be no opportunity cost

Wrong! Opportunity cost includes leisure time. If you are standing in a DMV line after you get off work your output may be 0 but no sane person will tell you that there is no opportunity cost for them to stand in this line. They could be at home watching TV, having intercourse with their wife or reading a book.

 

[opticalmace]

Originally posted by: kt

Originally posted by: opticalmace

Originally posted by: Ikonomi

Originally posted by: Elitebull
there's no free lunch

The one phrase I remember from my economics classes. And true, too.

Then explain my panini.

It means nothing is free in this world.

Yes, but can you explain the free lunch my friend purchased me?
Laws are failing!

 

[fyleow]

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[fyleow]

..

 

[mchammer187]

Originally posted by: fyleow
mchammer do you major in economics by chance?

anyways my friend brings up a good argument. he said that assuming a two-good economy where you can either produce corn or steel and no other alternative. let's say you eliminate the middleman cost in the corn, and therfore it makes you more efficient and now you can produce one extra corn. youve just increased the production of corn without sacrificing anything.

my argument being...the opportunity cost is taking the risk in eliminating the middleman? heh....

no not a major i took a few econ classes but I did get A's
I am an a 4th year electrical engineering student

the point is you are always taking a risk however small it maybe you are right
in that situation you are taking a risk in eliminating the middleman though i am not sure how the middleman affects how much corn you produce if
you are producing the corn

but i guess it would be like selling a house
you can go through an agent or by owner

selling it without the agent is like going by owner you get all of what would have been the commission if you sell it yourself
but you could royall f things up if you forget something in the contract

 

[kt]

Originally posted by: opticalmace

Originally posted by: kt

Originally posted by: opticalmace

Originally posted by: Ikonomi

Originally posted by: Elitebull
there's no free lunch

The one phrase I remember from my economics classes. And true, too.

Then explain my panini.

It means nothing is free in this world.

Yes, but can you explain the free lunch my friend purchased me?
Laws are failing!

That's easy enough to answer. His repayment comes in many forms. Either because you've done him a favor, or will be doing him a favor. Or simply because out of his kindness he's treating to a "free" lunch where as his reward is to see you being happy to receive the free lunch he provided.

 

[opticalmace]

Originally posted by: kt

Originally posted by: opticalmace

Originally posted by: kt

Originally posted by: opticalmace

Originally posted by: Ikonomi

Originally posted by: Elitebull
there's no free lunch

The one phrase I remember from my economics classes. And true, too.

Then explain my panini.

It means nothing is free in this world.

Yes, but can you explain the free lunch my friend purchased me?
Laws are failing!

That's easy enough to answer. His repayment comes in many forms. Either because you've done him a favor, or will be doing him a favor. Or simply because out of his kindness he's treating to a "free" lunch where as his reward is to see you being happy to receive the free lunch he provided.

But there was no cost to me! And he doesn't expect a favour in return.

 

[Tran23]

In a sense, your friend is right. The PPF curve is only used to demonstrate 2 products(or categories). If you are on the curve, the only way to move to another point on the curve is to give up output from one product to allow more output of the other. The curve itself shows how the available resources can be used, so the only way the curve can shift is by newfound resources, or by advancing technology.

 

[fyleow]

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[TuxDave]

I would guess opportunity cost would be zero only if there is absolutely no other choice

 

[GasX]

Anyone believe this knowledge is valuable in the real world?

 

[mchammer187]

Originally posted by: Mwilding
Anyone believe this knowledge is valuable in the real world?

it is if you are an econ prof otherwise very little value but I wouldnt say none

 

[Dissipate]

Originally posted by: Mwilding
Anyone believe this knowledge is valuable in the real world?

Unfortunately, not really. Business != economics

 

[Tran23]

Originally posted by: fyleow

Originally posted by: Tran23
In a sense, your friend is right. The PPF curve is only used to demonstrate 2 products(or categories). If you are on the curve, the only way to move to another point on the curve is to give up output from one product to allow more output of the other. The curve itself shows how the available resources can be used, so the only way the curve can shift is by newfound resources, or by advancing technology.

So in a PPF curve like that the opportunity cost can be zero, but in real life or when all factors are taken into account then it is impossible for the opportunity cost to be zero?

It can seem that there is no opportunity costs, as you aren't losing anything, only increasing production. But the opportunity cost would be how you choose to increase the production. Using your example, if you made 3 corns(tons, bushels, anything) and 3 steel(slaps, tons), and were able to increase production to 5 corns, the opportunity cost would be 2 steel, as you could've made 2 additional steel instead of 2 additional corn.