Monday, July 27, 2009

Opportunity cost: A story in pictures

In a previous post, I told the story of our first flat tire in Chicago. In a nutshell, we discovered that there are no tire stores in our Chicago neighborhood of Hyde Park, whereas similar Chicago neighborhoods have multiple places to fix flat tires. I am still puzzled why there are no tire places nearby.

Confusion aside, we needed to get the flat tire repaired. Before we can get our car into the nearest shop, I had to replace the flat tire with our spare. This was no small task given my subpar mechanic skills and the fact that my muscles had undergone a year of graduate student atrophy. Forty minutes after I started, the spare was successfully on the car as I collapsed in a heap in our living room.

As I was useless for another twenty minutes, my total time cost of changing the tire was one hour just to get the spare tire on the car. Economists call my next best option for using that time the opportunity cost of changing the flat for the spare. In plain language, opportunity cost is what you give up to get something.

A lesson in pictures. My opportunity cost of changing the spare...

is the value of my next best alternative. Perhaps, this is what I would have been doing:

Or, maybe we would have attended a White Sox game:

Or, there's golfing...

I could have been rearranging our dirty laundry to look like a person...

Or, pondering life by Lake Michigan...

But, most likely, I would have been studying...

I'll leave this open ended with a question to the readers. Studying was my next best option, but as you can see from the pictures, it doesn't exactly make me smile. Where's the value? And, how could we figure out how much value there is?

1 comment:

  1. Glad to see that you are using your post-core time wisely.


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