1. Decision-cost concepts
Opportunity cost [L4 s3]
Definition: value of the next best alternative forgone. It may be non-monetary; a paid amount is not automatically the opportunity cost. Tutorial application: the cheaper train comparison must include the value of two hours of lost paid work [Q2].
Sunk cost [L4 s5]
Definition: already incurred and unrecoverable; it should not affect the current marginal choice. Ticket example: the £30 is fixed at the time illness occurs, so the notes say to compare attending now with not attending now.
Relationship
The notes do not answer “Is sunk cost always opportunity cost?” Mark for verification; do not infer an answer. Key contrast to practise: next-best alternative versus unrecoverable past expenditure.
2. Marginal analysis [L4 s7]
Compare the additional benefit and additional cost of one more unit. Notes: continue when MB>MC; “MB=MC optimum” is tentative because assumptions were missed. Verify the missing assumptions in slide/course material.
Active recall: define opportunity cost [s3]; why can the cheaper train cost more economically [Q2]? why should £30 not control the ticket decision [s5]? what comparison does marginal analysis make [s7]? Answers remain in the sections above, not beside the prompts.
40-minute route: 8 minutes term contrast; 12 minutes redo ticket/train without notes; 10 minutes create two new scenarios; 5 minutes retrieve marginal rule; 5 minutes locate missing assumptions and sunk/opportunity relationship in permitted course sources.