#Economics101 Archives - Page 119 of 120

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.

Scarcity is the primary dilemma of economics.

In this, there is a cold-hard fact that we all wish to avoid whenever possible.

It is this: In the face of scarcity, people face trade-offs.

For instance, time that I spend writing cannot be spent reading.

And sadly, time reading can never be spent writing.

I give up half a Saturday every weekend during the summer to take the family swimming. And it is time I gladly give up.

Like I said: In a world of finite resources and time, people face trade-offs.

Others have said: “There is no free lunch.”

That could not be more right.

Economics 101: Opportunity Cost