What are Opportunity Costs?

Micro – Opportunity Cost and Production Possibility Curves

In this course, Dr. Annika Johnson (University of Bristol) and Dr. Stefania Simion (University of Bristol) explore the topic of Opportunity Cost and Production Possibility Curves. In the first module, we look at what Opportunity Costs are. After this, we explore what production possibility curves are. Then, we look at the connection between efficiency and Production Possibility Curves. In the fourth module, we look at what happens when the Production Possibility Curve shifts. After this, we look at how Production Possibility Curves can be used to illustrate Opportunity Costs. In the final module, we explore why the Production Possibility Curve is curved shaped.

What are Opportunity Costs?

In this module, we explore what Opportunity Costs are. In particular, we will focus on: (i) how Opportunity Costs are defined as the value of the next best alternative forgone; and (ii) an example that explains how Opportunity Costs work on a countrywide level.