Economic is the knowledge of how humans making choices in the face of scarcity. We are living in a world that resources are limited and the need of the people are unlimited, the economists are looking for an easy way to allotted sources by opportunity cost. The concept of opportunity cost most of the time use in business for analyzing the existing sources. Sometimes in scarcity of resources we are making a decision instead of another one, it is the opportunity cost. If we have a choice in a multiple-choice. Opportunity cost does not limit to the financial, It also involves the value.
Consider that a person who has 50$ can either buy a book or a dress. If she buys a book, her opportunity cost will be clothes, and if she buys clothes, her opportunity cost will be a book. If the number of possible choices for this person is more than 2 and she chooses one, her opportunity cost will be the best choice among the remaining choices.
I am going to mention some of the opportunity cost that I have faced in my life. Five months ago, I decided to trade online. I searched many websites, read various articles, and passed a course in Coursera about trading online. Finally, found multiple-choice, investing in cryptocurrency, trading in Aliexpress, Alibaba, Amazon, and investing in stocks. I made a decision to invest in cryptocurrency because of various reasons. Cryptocurrency is new in the world, it has a high return, security, and your money is yours alone. After two months realized that I am not professional at trading in cryptocurrency, lost most of my money because of a lack of risk management. Lost opportunity trading in Alibaba, Aliexperss, and Amazon is the cost opportunity That I have paid. If I bought products from these online websites and sold them on the regional website (Opensouq), I have a lot of return and have been expanded my trade.
When I was in high school, I have a dream to be rich at the age of 24years old. I had three choices for achieving my goal:
- Pursuing my school and university to get a degree in business.
- Opening a store working hard until to be rich.
- Working in-store, and pursuing my studies at the same time.
But I chose to pursue my studies to get a degree in business administration. If I chose to pursue my degree and open a store in my local. I will be a good invertor and trader.