Opportunity costs: Their place in the theory and practice of production

Abstract

AbstractThe concept of opportunity cost, or foregone opportunities, is central to the economists' discussion of full costs. In many of these discussions opportunity cost in exchange is emphasized, while the opportunity costs in production are not fully discussed and embellished. It is the purpose of this paper to expand upon the notion of opportunity cost in production and demonstrate that, under general conditions, the full costs of economic theory may often illuminate the alternatives of a management decision problem.