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A Child and Her Father Are Walking

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A child and her father are walking. The child knows there are such things as birds but has never seen a bluebird before. Upon seeing one, she says, "See the birdie," and her father replies, "Yes, that's a bluebird." This example demonstrates


Definitions:

Comparative Advantage

The ability of a country, individual, or firm to produce a particular good or service at a lower opportunity cost than others.

Marginal Cost

The cost incurred by producing one additional unit of a product or service.

Opportunities Forgone

The benefits, profit, or value of something that must be given up to acquire or achieve something else.

Opportunity Cost

The outcome of forgoing possible advantages from other alternatives by choosing one option.

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