Learn more about moneyandinvestments with this collection
The impact of opportunity cost on personal and professional life
Evaluating the benefits and drawbacks of different choices
Understanding the concept of opportunity cost
Opportunity cost can help you make better decisions
And that's because it helps put your decisions in context. Costs and benefits are framed in terms of what is most important to you at the time of the decision.
Every time we make a decision involving mutually exclusive alternatives, we will always be subject to this thing called “opportunity cost“.
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Opportunity cost and time
Suppose you’ve just learned how to do your taxes. You estimate that it will take up about two hours of your time if you did it yourself. Your cousin, who happens to love doing taxes, offers to do it for you for $50, with a free tub of ice cream.
If you rejected your cousin’s offer, you’d sa...
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Applying opportunity costs to decisions not involving money
- Imagine facing the decision of painting a wall in your room green or blue. The paint of both colors cost the same, and both look equally good.
- After giving it a little thought, you realize that by painting your wall blue, you’d probably not be able to hang your favorite poster becau...
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Related collections
Other curated ideas on this topic:
Opportunity Cost: You Can Do Anything but Not Everything
When mulling over multiple choices, the quality of any option cannot be assessed in isolation from its alternatives. The price you pay (or the sacrifice you make, or the benefits you give up) for doing what you’ve chosen to do instead of doing something else is the opportunity cost.
Opportunity Cost Calculations
Many people and organizations fail to take into account the various opportunity costs.
- We need to actively question ourselves about the alternatives that may be missed out by deciding on a particular option.
- The often neglected cost of waiting too long is also a ...
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