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1 Topic of opportunity cost In this section we will discuss what are the opportunity cost and application of the opportunity cost in attending an MBA program and Malaysia pegging its dollar to the US dollar 11 Concept of the opportunity cost Choice involves sacrifice The more food you choose to buy the less money you will have to spend on other goods The more food a nation produces the fewer resources will there be for producing other goods In other words the production or consumption of one thing involves the sacrifice if alternatives This sacrifice of alternatives in the production or consumption of a good is known as its opportunity cost Sloman J 2003 p 7 In theory the opportunity cost of any activity is the sacrifice made to do it It is the best thing that could have been done as an alternative A rational person will choose to do an activity if the gain from so doing exceeds any sacrifice involved In other words whether as a producer a consumer or a worker a person will gain by expanding any activity whose marginal benefit MB exceed its marginal cost MC and by contracting any activity whose marginal cost exceed its marginal benefit The term cost in economists are referring to opportunity cost in other words the sacrifice of alternatives Sloman J 2003 Thus the economists rule for rational economic behavior is that a person should expand or contract the level of any activity until its marginal benefit is equal to its marginal cost At that point the person will be acting efficiently in his or her own private interest Only when MBMC can no further gain be made This is known as a situation of private efficiency By analogy social efficiency will be achieved where for any activity the marginal benefit to society is equal to the marginal opportunity cost to society 12 Application of opportunity cost The research evaluated students return
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