“Guns vs. butter” has been a perennial feature of standard macroeconomics textbooks for decades. The phrase purports to illustrate the concept of “opportunity cost,” which economists define as the highest-valued alternative foregone by choosing one course of action over another. It is a simple way of showing that given a finite stock of resources represented by a “production possibilities curve,” one must make trade-offs. By consuming more of one good, a decision-maker can consume less of another. The highest-valued good that is given up is the opportunity cost.
Stay informed.Stay ahead.
Join Washington Examiner for unlimited access to the news, analysis, and commentary that matter most.
See Options
Already a member? Log in
Print subscriber? Click here to login/register your account
Digital subscriber? Click here to login/register your account.
