Chapter 7 DB Topic #6
Jacques Kaikai
yesterday at 8:01 PM
In general what i understand about opportunity cost from my high school teachings is that; opportunity cost is the sacrifice or foregoing of one thing for another. According to our text book, opportunity cost is the potential benefit that is given up when one alternative is selected over the other. Opportunity cost is one of the basic concepts of economics including scarcity, choice. Opportunity cost is very fundamental in making decisions, opportunity cost happens in our daily lives. For instance, During my first semester in the MBA program, i had to take the foundation classes and these classes were help on Saturdays in the morning. I am a huge fan of the English Premier League and i am used to watching all games. Since my classes were more important to me though the English Premier League also interests me; i had to forego the English Premier League for my MBA classes. In this situation, the English Premier League is my opportunity cost.
Another practical example of opportunity cost is wanting to watch a new movie an the cinema but you have a mid term exam on the way. Here you have to choose between studying for your exam and watching a newly released movie. Finally you decided to study for your exams, therefore, the opportunity cost here is the foregone of the newly released movie and the pleasure of watching it.
In our careers and personal lives, it wouldn't be difficult for us to apply the concept of opportunity cost provided we know our priorities. This is where another economic concept comes in, the concept of "scale of preference" which is putting our choices in order of priorities.
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