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New Trade Offs for Old Money

by AdrianFohr

The opportunity cost of something is what you give up to make a choice. or The opportunity cost of a decision is your second best option, the one you didn't choose.

"There's this concert.  Green Way is coming to town. To hear those great songs from American Dolt performed live you are going to stand in line, camping out for tickets.  You get to the box office about midnight, but don't sleep much because it's noisy.  Finally, sleep does come.  It only seems like a few minutes later when the clank of the ticket window opening wakes you at 8:00 am.  In the sunlight, you notice that there are way more people in line than you thought.  Thousands, in fact.  You may not get tickets, even after camping out.

Follow the link for an excellent explanation of opportunity cost; and, to read the rest of the parable.

http://www.econlib.org/library/Columns/y2006/Mungeropportunitycost.html

 

For extra credit, when Marge stops working at home and starts working at the plant what do we expect to happen to GDP?   Is this true even if Marge later decides that she was more productive at home?

How the Simpsons Teachs Opportunity Cost

Abe Simpson gets a girlfriend. He must chose between spending a day with his family or his girlfriend. Later, he has to choose between spending an inheritance on himself or other people. His limited resources exemplify opportunity costs.

from The Simpsons: Old Money (1991)
Creator: Matt Groening
Distributor: 20th Century Fox
Posted by AdrianFohr
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