Explain a time in your life when you experienced opportunity cost. Why did you make the decision? What was another alternative that you could have made? Discuss how scarcity influenced your decision.
According to our textbook, the term opportunity cost is used to refer to a situation where we lose alternatives when choosing only one of them (Greenlaw & Shapiro, 2018). For me, the opportunity cost of ordering my favorite ice cream from a tiny restaurant is a plate of dumplings in another restaurant I would give up. I literally hate cooking, and with such a personality, I am lucky enough to live in China, where food delivery is usually only a tiny little bit more expensive than cooking the same dish yourself. Usually, I also do not have enough time to cook – I am a dedicated worker and hard-working student. Therefore, I often end up ordering food delivery from the nearest restaurants and stores.
I have some criteria when choosing what exactly to order. First, I check how much money I have until the next salary. This shows me, whether I can buy something more expensive and delicious (for example, my favorite ice cream), and later order something else – which means, that I will spend more money than usual, – or whether I should stick to normal food and eat something simple (for example, dumplings) just to solve my hunger problem. Second, I check how much time I have – whether I can afford myself waiting for long or not, and whether I will have enough time to eat what I ordered afterward. Finally, I look at myself and think – do I really need a dessert, will I have enough time to go to the gym later, or do I care about it at this moment? Usually, if it is the beginning of the month, I buy ice cream. At the end of the month, my choice is changed – I start thinking about the next salary day and my body condition.
Thus, scarcity influences my decision at the end of each month: I simply cannot afford to buy everything I want. According to our textbook, scarcity stands for the fact that humans have only limited access to resources, goods, and services. We will never be able to buy every single thing that we desire (Greenlaw & Shapiro, 2018). If at the beginning of the month, I have a good chance to buy ice cream, and if I feel hungry a little later, I will simply order another food set. However, at the end of the month, I cannot afford such purchases and buy normal food instead of dessert to get full spending less money on it (because the price of one plate of dumplings is equal to the price of a portion of ice cream, but sometimes you can still feel hungry if you eat a dessert only). Therefore, after the salary day, I do not really feel the issue of scarcity, but the sooner the salary day is, the more serious this issue is, and I start thinking much more about how much and on what I spend.
Of course, there are so many other and probably better examples of the opportunity cost in my life, but I decided to write about this small thing because my life is already complicated enough, and I wanted to find some examples that would make me smile.
Word count: 533.
References
Greenlaw, S. A. & Shapiro, D. (2018). Principles of microeconomics, 2e. Open Stax Rice University. https://d3bxy9euw4e147.cloudfront.net/oscms-prodcms/media/documents/Microeconomics2e-OP.pdf