Opportunity Costs

When economists talk about opportunity costs they are talking about the sacrifice a person is making when making a decision. This can be illustrated when looking at the stock market. For every stock a person buys, the amount of money they have to spend on other stocks decreases.


Opportunity costs are the things a person gives up when making a decision. This opportunity cost can be, but is not limited to monetary values. For every decision a person makes, there is alternative decision (opportunity costs). For example, if a high school has $10,000 to spend however they choose, and they decide to spend it on textbooks for AP classes, the opportunity cost would be not being able to spend the money on other items for the school. Another example would be a person decorating their bedroom. Let's say there is a lovely view of the lake through the window and the decorator decides to put a chair next to the window, the opportunity cost would be not being able to put the bed next to the window and see the view when they're going to sleep. An example of oppportunity cost in my life would be getting a job. If I get a job, I will have to work the majority of the work week adn weekend. My opportunity cost would be not being able to stay in the Dance Company and not being able to join the Outdoor Track team.