Monday, September 29, 2008

Opportunity Cost

WordNet defines opportunity cost as "cost in terms of foregoing alternatives." In other words, every decision to use limited resources (e.g., time or money) on one thing necessarily means becoming unable to use them on something else.

I rather enjoy technology most of the time. I'm young enough to have an overall good relationship with technological things, and old enough to really appreciate advancements in computer technology rather than simply taking them for granted. I suppose it's not surprising, being in that in-between stage, that I haven't really seen much need before now to embed video. This week, though, I'd like to show a video which illustrates opportunity cost. It's short (126 seconds) and simple. If all goes well, you'll see it here:

The actual term was introduced later, but the concept of opportunity cost was definitely part of my upbringing. Sometimes it was a decision offered to me. For example, I could devote my time in the school band to learning to play the trumpet or the saxophone, but not both. Which would I give up so I could choose the other? Other times it was a decision my parents made. For example, would they allow me to have a job during the school months or instead direct my focus to school and sports?

The little girl in this video was learning about opportunity cost. Given a limited amount of money and two real needs, what would they do? The answer was not to give up shoes entirely. Rather, she was willing to sacrifice her preferences to share with someone else.

I love the perspective that Alabaster nurtures.

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