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5 Cards in this Set

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is the amount of money that we trade for a good or activity.
is the amount of money that we trade for a good or activity. For example, the accounting cost of a lava lamp may be $59.99
economic cost
includes the accounting cost, the time and money spent driving to and from the store, the mental anguish in deciding the color and design and the social stigma you’ll experience when your friends see the thing in your room.
opportunity cost
the cost of the next-highest valued alternative to any given decision.
If you could have been working at $24.00 an hour for the two hours it took you to shop for the $59.99 lava lamp, and its ugliness caused your rich significant other to break up with you right before he or she was going to give you a $100 watch, what is the total cost of the lava lamp?
It would be the accounting cost of the lamp plus the opportunity cost of your time and lost romantic rewards: $59.99 + $24.00 x 2 + $100. That's one expensive lava lamp.
Positive economics
objective fact