At 08:41 PM 4/14/2005 -0400, you wrote: >Regarding opportunity costs, JDG said > > ... Economic Theory suggests that that is not proper foundation > for cost-benefit-analysis. According to generally accepted > economics, a government project should simply be considered based > on whether or not its benefits exceed its costs. ... > >which I find strange. When I studied economics, opportunity costs >were seen as one way of figuring out the value of benefits.
Think about it this way. A given project is calculated to cost $5 and provide $10 of benefits. Why wouldn't you engage in such a project? >For example, when many recruits turned out to have poor health because >they did not eat well -- as the US army discovered in World War II -- >it became evident that as a military measure, the country should >provide funds and suggestions for school lunch programs. This is not an opportunity cost. An opportunity cost is the value of the next-most-valuable expenditure for a limited resource. For example, the opportunity cost of me going to a dinner last night with a friend is the value of the enjoyment I would have received from going to a Nationals game. Your example is actually a reverse-measure of the benefits of a school lunch program. JDG _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
