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ERIC Number: EJ1091665
Record Type: Journal
Publication Date: 2016
Pages: 3
Abstractor: ERIC
ISSN: ISSN-0022-0485
Comments on "Opportunity Cost: A Reexamination": A Case in Point of No Free Lunch
Stone, Daniel F.
Journal of Economic Education, v47 n1 p32-34 2016
Ferraro and Taylor (2005) and Potter and Sanders (2012) have sparked a debate about the definition of opportunity cost (OC). This is, of course, ostensibly a very basic term, but Ferraro and Taylor said that most economists do not readily know its correct definition, and Potter and Sanders argued that this can be explained by the fact that there is no standard definition. In Stone (2015), the author of this article tried to contribute to this debate by pointing out that the term OC is commonly used, in both textbooks and the popular press, in two distinct ways: sometimes to refer to just an implicit cost (e.g., "the opportunity cost of lost earnings from attending college") and sometimes to refer to a total economic cost (lost earnings plus tuition, etc.). Stone then suggested using the terms implicit and explicit cost when discussing basic choice problems (e.g., the Clapton/Dylan example of Ferraro and Taylor) at the start of economics classes and books, to make the correct definition of economic cost unambiguous and the logic of analysis more clear. In summary, Stone states that re-reading Parkin's paper carefully and writing this piece have made him see that there are important differences between the quantity and value versions of OC and that for either version there are hidden "costs" of which one should be aware. Stone concludes by saying that however this discussion proceeds, he hopes that it will be a case in point of how open-minded scholars can learn from one another and come to an enlightened consensus.
Descriptors: Costs, Economics, Definitions
Routledge. Available from: Taylor & Francis, Ltd. 325 Chestnut Street Suite 800, Philadelphia, PA 19106. Tel: 800-354-1420; Fax: 215-625-2940; Web site:
Publication Type: Journal Articles; Opinion Papers; Reports - Evaluative
Education Level: N/A
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Grant or Contract Numbers: N/A