Video 4 Opportunity Costs vs Trade Offs
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Following up on our previous video on gains from trade, Tyler Cowen discusses another top idea in economics: opportunity cost.
When you make a decision, do you weigh all of the costs? Do you consider the tradeoffs you’re making? If so, you are assessing the opportunity cost.
To borrow an example from history, Cowen asks whether the Great Wall of China was a good or bad idea. It was intended to keep China safe from invasion and certainly there were benefits. But it required a lot of labor (as many as 800,000 people working on it!) and was extremely expensive to build. There were benefits but also very significant tradeoffs.
Examples of tradeoffs and opportunity cost are all around us. Cowen discusses some other instances in this new video!
Stay tuned for more videos in this series, Tyler’s 9 Big Ideas of Economics, released weekly!
Cowen delivered this talk at the 2018 AP Economics Conference co-hosted by MRU & the St. Louis Fed. If you’re a high school teacher that wants to attend this conference next year, register here: https://bit.ly/2DozLzv
Or join MRU at a future economics teaching event! Visit this page for more information: https://bit.ly/2AQIWq5
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