[This is part of the series: The Complete Guide To Economics 101.]
In economics, one of the fundamental facts behind scarcity is the fact that people face trade-offs.
This boils down the simple fact that: There is a cost for everything.
Or, said differently: “There is no free lunch.”
Opportunity costs are whatever you give up in order to get something.
- The opportunity cost of college was 4 years of lost full-time income.
- The opportunity cost of volunteering on Saturday morning is that I can’t take my daughter swimming on Saturday morning.
- The opportunity costs of writing this post is time not spent with my wife watching TV – or time that I can never read.
- And the opportunity cost of producing product X is that you cannot produce product Y.
The point is that for everything you do, there is a cost.
