Discussion: Opportunity cost
Opportunity cost can be defined as the cost that you give in order to have something else. It is the amount of the other good that you have sacrificed, that you could have had when you choose to buy a given commodity (Krugman &Wells,2013).We can look at it as benefits that someone foregoes by rejecting another alternative option.
Recently I bought an iPhone 5 and Samsung laptop and the main reason why I bought this two gadgets is that I just love having new and fancy things. The massive marketing of the two brands attracted me to them. By purchasing this two gadgets I gave chance to take an extra accounting course that would have been important in my career. The items have also drained my savings, initially I had a plan of taking a vacation to some sandy beach in the Indian Ocean but I can’t now because I cannot afford it.
If I had not bought the two items perhaps the opportunity cost would have been lack of admiration that I have been receiving lately when people see me with these gadgets. The music and games that in enjoy now I would have missed them as well.
When a business man sells a given product to you it is not because of the care and concern that he has but the motivation is that you will give your money in exchange for their product and that to them means making some money off you that translates into profit. Similarly, when an employee goes to work it is not because they love their employer that much that they want to see the company do well but the real motivation is the paycheck that an employee collects at the end of the month.
Both these examples concur with Adam Smith’s statement that people are chiefly motivated by their self-love and their own selfish interests whether it an employee working his back off or an entrepreneur selling some goods and services.
Krugman, P., & Wells, R. (2013). Microeconomics (3rd ed.). New York, NY: Worth.
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