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Finance What is opportunity cost All right Opportunity cost the

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value you forfeit by choosing a path a over path

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be and path a end or b can mean doing

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nothing at all right Here's an example Opportunity cost people

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Let's say you have a choice of taking two jobs

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One is a safe steady gig with ibm You have

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to commit to working there for twenty five years But

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the big blue boss has promised that at the end

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of that time period you'll get a good watch and

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a million dollars twenty five years and a million bucks

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and a reasonably decent lifestyle with low risk All right

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well that's half a two years into the gig You

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notice that a lot of your friends are whining about

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taxes and they're buying porsche's You're still paying off school

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loans working for ibm there Then ten years later your

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friends or buying jets What happened Well they went to

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work for a risky start up in silicon valley and

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got stock options And of course you think we'll shoot

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Where can i get me some of that Well you

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committed to the safe steady big blue for twenty five

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years you uh paid them with your commitment And in

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the process you gave away other opportunities You might have

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had teo make real bank by your own jets The

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opportunity cost of your desire for a nice safe job

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cost you big If you had been lucky enough to

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get a Job at 1 of those hot startup you'd

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be flushed with cash today just like your buddies All

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right Another example And this happens to be a common

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google interview question You win two free front row tickets

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to a sick poppy's concert which sell on stubhub for

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a thousand bucks each You decide to go to the

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concert How much did the tickets cost you They were

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free You say uh no You could have taken ninety

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seconds fill out stub up form and gotten too grand

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just selling them You chose not to receive the two

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grand go to the concert instead which in a land

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of opportunity cost lost is the same as paying two

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grand for the tickets In other words money earned and

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money lost It is not just counted by the dollar

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bills that flow in between your fingers It's the value

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in opportunities you take and in the value of the

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ones you miss So when you see an opportunity take 00:02:04.09 --> [endTime] it especially if it gets you frequent flyer miles

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