On 15 Apr 2005, JDG <[EMAIL PROTECTED]> wrote
An opportunity cost is the value of the next-most-valuable
expenditure for a limited resource.
That is not what it was 40 years ago. At that time the definition
that I learned was that
an opportunity cost is the value of what you give up
The `next-most-valuable expenditure' was `what you consider the second
most valuable expenditure'.
Thus, in the US, an opportunity cost for agricultural subsidies is
funding for a different way to handle currently farmed land:
In a science fiction nove, Alexander Jablokow talked of one
opportunity this way:
... They wore the uniforms of Huntmasters, recognizable anywhere
... As they grew older and more experienced, they could become
Wardens and develop a complete and intimate knowledge of the
wildlife of several hundred square miles of forest, guiding
hunting parties and making sure only animals slated for cull were
hunted. Such men often lived in the forest and grew to look like
earth gods, bearded and venerable. [These] two Huntmasters,
however, were young men and, being Lunar dwellers, could only
become Wardens of one of the underground Environments ...
p. 166
`Carve the Sky'
by Alexander Jablokow
1991, Willian Morrow and Co.
ISBN 0-688-10324-3
In US politics, a `next-most-valuable expenditure' might be to reduce
(urban) technological research to increase (rural) agricultural
supports.
The forgone technological research would be such an action's
`opportunity cost'. (If foreigners undertook the research, the
species might not forgo it; but America would.)
In this example, the additional (rural) support for an administration
in power, and diminished opportunities for its (urban) opposition
would define the value of the expenditure for the administration.
(For others, the `next-most-valuable expenditure' might be to abandon
people and companies that depend on rual subsidies and favor urban
research.)
In this set of definitions, the concept of `opportunity cost' does not
include the notion of preference. You may not like the alternative
opportunity. On the other hand, the concept of `what you consider the
second most valuable expenditure' does include the notions of
preference; and that you made the preference second in an ordinal
sequence.
Perhaps definitions have changed since I learned the concepts two
generations ago.
--
Robert J. Chassell
[EMAIL PROTECTED] GnuPG Key ID: 004B4AC8
http://www.rattlesnake.com http://www.teak.cc
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