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Monday, March 29, 2010
Price vs. Cost
Here's a comic that helps us differentiate between price and cost.
This can be hard concept for anyone to get clear. Price does not equal cost. And that thought provides a setup for the next post.
2 comments:
Yaira
said...
I thought this cartoon was funny. It was one of the first topics that we learned in class. The boy says he cannot "waste" his time. Although he is, by making things more complacated than what they need to be. The cost in this boys senario is time. As well as the father mentioned trying to find cheap gas. I believe this is an important lesson that many people are not aware of.
You're right. Too many people think cost = price. They forget that there are other costs (time, other resources such as gas, etc.) that are not as visible. And there is the opportunity cost - what else could you have done with the money/time/other resources?
All entries prior to August 15, 2007 appeared on the economic education blog of the Federal Reserve Bank of Chicago. Entries between August 15, 2007 and July 31, 2009 were under the auspices of the Powell Center for Economic Literacy in Richmond, VA.
2 comments:
I thought this cartoon was funny. It was one of the first topics that we learned in class. The boy says he cannot "waste" his time. Although he is, by making things more complacated than what they need to be. The cost in this boys senario is time. As well as the father mentioned trying to find cheap gas. I believe this is an important lesson that many people are not aware of.
Yaira,
You're right. Too many people think cost = price. They forget that there are other costs (time, other resources such as gas, etc.) that are not as visible. And there is the opportunity cost - what else could you have done with the money/time/other resources?
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