, COSTS ARE OPPORTUNITY COSTS
Businesses must pay
higher prices to obtain
more of an input
because opportunity
costs change with
circumstances.
The marginal costs of
additional inputs (like
labour) are ultimately
opportunity costs —
the best alternative
use of the input.
, • Marginal cost
additional opportunity cost of increasing
quantity supplied
• Marginal cost changes with circumstances
– Increases as you increase quantity supplied
• To buy inputs, a business must pay the price
matching
best opportunity cost of the input owner
Businesses must pay
higher prices to obtain
more of an input
because opportunity
costs change with
circumstances.
The marginal costs of
additional inputs (like
labour) are ultimately
opportunity costs —
the best alternative
use of the input.
, • Marginal cost
additional opportunity cost of increasing
quantity supplied
• Marginal cost changes with circumstances
– Increases as you increase quantity supplied
• To buy inputs, a business must pay the price
matching
best opportunity cost of the input owner
