Opportunity cost. The true cost of a motorcycle is not its money price but rather a lawnmower. The true cost is the opportunity cost—what the resources that went into the motorcycle could have produced had the motorcycle not been built.
It is part of the marvel of a free market that, under the right conditions, the money price of the motorcycle exactly represents the value of the resources that went into producing the motorcycle, namely the value those resources would have had in their next highest-valued use.
It is part of the marvel of a free market that, under the right conditions, the money price of the motorcycle exactly represents the value of the resources that went into producing the motorcycle, namely the value those resources would have had in their next highest-valued use.
OLEKSIY MAKSYMENKO/ALAMY
DON NICHOLS/E+/GETTY IMAGES
DON NICHOLS/E+/GETTY IMAGES