Explain the relationship between opportunity costs and money costs. Can they be treated as identical?
What will be an ideal response?
The two costs are usually closely tied because of the way in which a market economy sets prices. If the market functions well, goods that have high opportunity costs will also have high money costs. In turn, goods that have low opportunity costs will also have low money costs. However, it would be a mistake to treat opportunity costs and explicit monetary costs as identical. For one thing, sometimes the market does not function well, and hence assigns prices that do not accurately reflect opportunity costs.
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