Criticism of opportunity cost, Microeconomics

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Criticism of Opportunity Cost

The concept of opportunity cost is criticised on many grounds. Critics observe that it is only a notional cost. The earnings foregone by one person which might have been earned by another may not be invested by the latter. Further, employment market may not be having steady potential to absorb skilled labour at all points of time. The salary and service conditions of those who do skilled labour or take up professional employment need not be comparable.

Hence, assumptions regarding opportunity cost will be valid and meaningful only when there is a demand for skilled labour, waiting time for employment is zero, the income earned is not consumed by the other person (either in part or full) but invested profitably, service conditions are comparable, and so on.

 


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