Opportunity cost is defined as "the amount of other products that must be foregone or sacrificed to produce a unit of a product." Another way to look at it is the value of the activity which is the next best use of your time. This exercise will ask you to relate this concept to decisions you make.
Post your responses to the following questions in the Opportunity Cost discussion forum:
- What would you be doing with your time and energy if you were not taking this class? Explain the other activity in some detail. How do you value the cost of not doing the other activity? Be explicit in defining the costs associated with each activity. Put a value on each element.
For example, I am trying to decide if I should go to a football game with the guys. I have an idea of the cost of the tickets, transportation, and the food and beverage. I clearly have the benefit of the enjoyment of the game. However, this is not all that needs to be considered. If I did not go to the game, what would I be doing? Well, I could take my wife out for dinner. How much value do I give to going out on a date with my wife? Or, I could spend time earning income. NOTE: Be careful, you cannot do everything. You must select the next best thing you would do with your time, energy, money. Once you have evaluated both uses of your time, are you still going to go to the game or are you going to take your wife to dinner? Now think of your own story about a tradeoff you have had to make, or will need to make in the future.
- After you have posted your response review the posts of your other classmates. Respond to at least two of them (preferably to those who have not yet received responses), by identifying elements that perhaps the original posting may have overlooked or some considerations that should have been taken into account.