Opportunity cost is very popular in the field of economics and business. Cost alone helps to determine supply. When costs of inputs are known, the firm’s goal becomes clear and that is to maximize earnings given the knowledge about demand for its product and its cost patterns. This means that the cost of production is put in line with revenues. But the term opportunity cost is different because the firm for example needs to give up something for they are expecting bigger revenue in return.
Opportunity cost, given its spirit is common among individuals in their everyday life. Personally, this happened to me recently, as I made a big decision that affected the rest of my life. I am working as an accountant in a multi-national company. I can say that my job is fulfilling. I can attend to my needs. I have a lot of savings. And because the money that I am earning is more than enough for me, I am helping other people too, financially. But then, after three years of working and earning too much, I am not happy.
Perhaps because this is not the way I planned for my life. Even when I was a child, I
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I gave up being an accountant to the multi-national company I worked with for three years and looked for a law school near my house. I did this because my former company was not supportive of my dream of becoming a lawyer. I convinced them that I can do both at the same time– studying and working. But they insisted me to choose one only. Their point is that, as I study, my concentration in work will be diminished because of my studies. And so, I chose to study. I looked for a part-time job near my hometown.
Of course, part-time jobs while studying are not financially fulfilling compared to my full time job before. But I ignored that fact. What is important for me now is that, I am in law school slowly fulfilling my dream. My family and friends were all against the decision I made. Most of them said I was crazy for letting go of my full-time job.
R E F E R E N C E Hanson, Robin. (2009). Obama’s Opportunity Cost. Retrieved, July 3, 2009 from http://www. overcomingbias. com/2009/06/obamas-opportunity-cost. html