The Concept of Opportunity Cost: Is it Simple Fundamental or Necessary?

Surveys by Ferraro and Taylor (2005) point to abysmal understandings of the concept of opportunity cost by US undergraduates, graduates and faculty, and raise important pedagogical and conceptual issues. One implication is that the concept is poorly taught in textbooks and classrooms, from which it follows that remedies are needed. Three further implications strongly influence the nature and extent of these remedies. These are that opportunity cost is not a simple concept but a difficult one, that it is not a fundamental economic concept but a subordinate one, and that graduates do not require a good understanding of the concept for successful careers as economists. This paper presents logical arguments supporting these propositions, and discusses their bearing on general strategies for dealing with the pedagogical problem.