Sunday 2 September 2007

opportunity cost

Hi,

I went to Egypt for the summer to learn arabic in a two month intensive course. But what is that actually worth? We could look at the empirical value, it cost me about £800 to study, live, tour and explore Egypt. But then that doesn't really account for how much it was worth to me. Say for example, it is worth much more to me than the simple empirical sum, because I enjoy arabic and love exploring new countries much more than £800.

So how to attach a value to this trip then? let continue with the price route: So, the fact that I spent £800 on the trip tells us what? It tells us that this trip was more valuable to me than say spending it on a holiday in France...or buying a new Laptop...or the other millions of things I could do with £800. so thats it: the opportunities I foregoed to go to Egypt is the implicit cost of the trip to Egypt to me.

This opportunity cost can apply to a variety of different things such as time...the time i spent in Egypt is much more valuable to me there than anywhere else....because I spent it there.



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