01 July 2016

Opportunity Cost

It's a simple concept.

Maybe too simple.

I grokked opportunity cost in its fullness within minutes of the idea being given name to me.

The rest of the class in microeconomics didn't.

It took another week of the professor explaining it for a plurality of the class to get it, but I am certain we moved to the next topic with some still baffled.

Just in case you've never encountered the term...

If you spend something on something, you cannot spend it again on something else.

Most often this is expressed in terms of money.

If you have $5 and a hamburger is $5 and a movie is $5 you can only choose one.  Buying the hamburger costs you the opportunity to go to the movie.

Money spent on expensive trips is money that cannot be used for home repairs.

Money spent on home repairs means forgoing expensive trips.

It's a matter of priority.

You will also find that people who grasp opportunity costs have little sympathy for your plight when you waste the opportunity to fix the essentials by taking the opportunity to neglect them.

Especially when they fixed the burst pipe and sucked up paying the water bill rather than go on the Hot Rod Power Tour.

It's truly the bed you made by being the grasshopper instead of the ant.

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