So, what's the cost of reading this? It's all that out-of-pocket stuff, plus whatever pleasure or income or other value you would have obtained with this time if you weren't reading this. So, it's direct costs + indirect costs, where the indirect costs are figured from the best thing you gave up. The sum of these costs is called opportunity cost or sometimes economic cost, or even just cost. Anytime an economist refers to cost, this is probably what she means.

   Why do economists think this way? Are we just trying to make your life harder? No, that's just a nice side-effect. The real reason is that this understanding of costs is necessary because it's the only way to understand how real-world decisions are made.

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