Macroeconomics: Opportunity cost

Abstract

In this paper, the concept of opportunity cost was taken into account. It is an irrefutable fact that it is of paramount importance not only for ordinary citizens, who need to consider it in their everyday life, but also for governments of all states. In order to demonstrate the essence of the issue under consideration, the example of the trip to Costa Rica and the work in Alabama was used. The purpose of the paper was to find out the opportunity cost of the journey. Furthermore, making a profound analysis of the concept of opportunity cost cannot be performed without understanding its definition as well as the main peculiarities. This is the reason why a reliable source, which touches upon this issue, was used in the paper.

Nowadays, opportunity cost is defined as “the benefit forgone from using an asset in its best alternative” (Maher, Stickney& Weil, 2011). Taking into account the fact that one can earn $500 working during the spring break, it is evident that the principal opportunity cost of the trip to Costa Rica comprises having a rest. One needs to spend a larger sum of money as he/she needs to pay $800 rather than to earn a great part of this sum. On the other hand, a person is going to have some new impressions by travelling to another country. He/she does not have to worry about accommodation or food as they are included in the price. These issues are also included in the opportunity cost.

Moreover, a spring break is aimed at providing a personality some time to relax. Instead of working the whole day without having a proper rest, one spends his/her money on gaining some new experience, sightseeing, or meeting some new people and making friends with them. This is also the opportunity cost of the journey as these are the main benefits of it. A person who chooses a trip looses $800 ($500, which could be earned, and extra $300, which could be spent not on the trip but on any other issue) as he/she prefers to have the benefits included in the opportunity cost rather than to earn money.

The Economic Advantages of the Division of Labor The Abu Dhabi National Bank
Related essays
to our service and get 10% from every order
Chat with Support