23 August 2016

Opportunity Cost

Although it appears to be the most difficult topic in all economics to teach... it's actually very simple.

Money you spend on one thing, cannot also be spent on another.  By buying the first thing, you give up the opportunity to buy the second.  Likewise, buying the second item costs you the opportunity to purchase the first item.

I remember the first time I noticed it.  I'd spent my allowance on a 1/72 scale SPAD XIII.  I came across another model I wanted more at the flea market, but had already spent my money.  No Star Trek 3-ship set for Thag the Younger.

Something I noticed about the event is how I got no sympathy from my elders about not having the money anymore.  The most sympathetic voice was my grampa and it was limited to, "it would be nice to have enough to buy both, but you never do."

Mom was harshest.  "In the story of the ant and the grasshopper, the ant is the one you emulate," because she felt that I should have saved my allowance.

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