Cost
Cost is subjective because values are subjective. The value you place on your next best option is how much something costs you. Amazingly, the costs you use to make decisions are never imposed upon you.
Marginal Cost: the change in your cost from taking an action; additional cost incurred by another unit of something; decisions correlate to either more or less cost
Sunk Cost: resources that aren't recoverable--bad economic decisions are made when sunk costs are factored into the equation
The Water-Diamond Paradox: water is extremely valuable, but has a very low exchange value, while diamonds are frivolously useless, but have a very high exchange value.
We have the ability to address this paradox that Adam Smith didn't possess. Statements such as "it's awful that teachers are paid so little, and professional athletes are paid so much" ignore the margin. Some people might assert that the pay discrepancy shows how misplaced "society's" values are, but they would be incorrect. How much we value the total might be more than we value the margin. The Water-Diamond Paradox is an effect of scarcity. It's not that we value sports more than education, but rather that there are simply far more teachers than there are professional athletes.
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