A Concept To Understand In Order To Make Informed Choices
If you were to walk away from this course with the knowledge of only one concept, I would want you to walk away understanding the concept of “opportunity cost.” It is a very powerful concept that will alter your perspective regarding decision making. Economists believe that anything you choose to do has a cost associated with the choice. Choosing to sit in class and listen to me, or sit in front of your computer and read what I am writing, has a cost. You could be doing something else with your time and effort. The opportunity cost of doing one thing is the value of what else you could be doing.
Instead of sitting in class or in front of your computer, you could be working and making some money for example. If working were to be you next best alternative to sitting in class or in front of your computer, then your opportunity cost of sitting in class or in front of your computer is the wages you forgo by not working.