Is it correct to say that the opportunity cost is a particular point on the supply curve? And if so, why?

I understand what is going on with the opportunity cost with the production possibilities curve (how you give up more of one good when producing another), but I'm just not sure how it relates to the supply and demand curve, and area underneath the supply curve.

On this video, (https://www.youtube.com/watch?v=zEE-qOuo_Cw), at 3:15, he says that there is an opportunity cost more than $9. Why is this referred to as opportunity cost?


Opportunity costs occur for all suppliers. The lowest price at which supply occurs (agents willing to sell) is just above the lowest opportunity cost of the suppliers.

I would not describe it as a point on the supply curve. Because you will not offer something for sale unless it is greater than you opportunity cost. It is important to note that opportunity costs dictate the starting point and slope of the supply curve.

So presuming your opportunity cost for 1 unit is 10\$ you will only sell at 11\$ (opportunity cost + 1), another persons opportunity cost may be 12\$ and so they are only willing to sell at 13\$ hence the increase in quantity supplied as price rises, more and more people are willing to sell as their opportunity costs are covered and they can make a profit.

  • $\begingroup$ Thanks so much for the useful answer. I'm still a bit confused about how opportunity cost relates to supply. Is it correct to say that more opportunity cost means more alternatives not taken, which means they need a higher price? $\endgroup$ – Christopher U Nov 24 '19 at 5:51
  • $\begingroup$ Okay so opportunity costs are by definition the loss of other alternatives when one alternative is chosen. So say you value your time at 10\$ an hour since that is what you can get paid to work for someone. And your neighbour asks you to mow his lawn for 8\$ an hour, you will most likely not do it, but if he offers you 15\$ you will most likely do it since he is offering more than your opportunity costs of 10\$. @ChristopherUren $\endgroup$ – William Cerkvenik Nov 24 '19 at 13:02

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