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I beg to differ, time lost is not tangible nor quantifiable. OC is an economic concept, which is not always quantifiable, which has nothing to do with philosophical discussion.
An incredibly important concept in many strategic decisions/negotiations in life and business that many, despite high grades in Economics at Harvard, etc, fail to grasp and/or practice in real-world decisionmaking
IMO, should be taught repeatedly in various forms from age 4-5 onwards, as it's clear (like many basic concepts in stats and probability) that opp cost is not understood by many allegedly smart, highly educated people
It sounds good and my definition of opportunity cost is: The cost of passing up the next best choice when making a decision.
For example: if an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose the asset could have been used for. Opportunity cost analysis is an important part of a company's decision-making processes, but is not treated as an actual cost in any financial statement.
@hsw,
"An incredibly important concept in many strategic decisions/negotiations in life and business that many"
I agree 100%, and that's one of the reasons that I picked this concept.
@anita2545
I like your definition better than mine. "pass up" sounds better than "give up" and "forgo" would be good for college audience I think...
Also, "asset" is good for it covers both "money" and "time", but not that sure the complete example drive home totally...
I'm thinking of using a concept to demonstrate something to college, high school and middle school students. Opportunity Cost is big on my mind for two reasons:
a) The audience would benefit from learning it while seeing my demo.
b) It should be fairly easy to be grasped if presented/explained clearly and concisely.
Here's my definition for it:
Opportunity Cost is the cost of giving up the second best alternative when you decide to spend your money or time on one thing or activity.
Example
Between Pam and Sheila, John decides to date Sheila. The Opportunity Cost of John's decision is not the opportunity lost of being romantically involved with Pam.
(Of course this is a good John
Question is, how does it sound to you?
everything has a cost. you can use practically any example or occurrence in life to show an opportunity cost.
everything has a cost. you can use practically any example or occurrence in life to show an opportunity cost.
That's insightful. And check out this sample, Concept Mapping Tutorials (http://www.knowledgenotebook.com/tutorials/conceptmapping5.html - broken link) (and of course you may start from conceptmapping1.html),
see if it makes sense, it's an attempt to drive a point across without sounding like lecturing... can we do better for the insight? That is, to make it sound more "soothing" to the ears of 18 to 23 year olds while getting the point across effectively? Thanks.
what is the opportunity cost of john's decision this would make things more clear to me. I am helping my son study for a test and this example threw me off track.....pls explain thank you
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