There is Always a Cost

I love shoes. Lots of shoes. In fact, I’d rather buy shoes than most anything else. Probably because I don’t have to worry about what my hips look like in them.

Anyway, I was thinking about what I’m learning in school and realized that my Macroeconomics class does, indeed, have an application in my life. Now, most of you probably already know that when you spend money on one thing you don’t have money for another item. I did, too, I just didn’t know that it had a name. Did you?  It’s called “Opportunity Cost” and it means the price one pays for choosing one something over another. Of course, it doesn’t have to be regarding shoes, it really applies to any area of our lives, but I’m talking shoes here, so I’m sticking with my analogy.

The above shoes are wonderful, in my opinion. Of course, I have to temper that opinion with the knowledge that I have absolutely no where to go wearing them (my circles don’t run to that style….hmm, speaking of running, you wouldn’t get any of that done in these either, would you?) I also have a gene-level aversion to purchasing anything for $600 a foot that’s going to walk through mud and water and possibly gum (yep, they’re $1200). And if I did find them on my size 9.5 ‘ers, I’d probably trip over my feet while watching the pretty bows, slice a major blood vessel and bleed to death because of the spiky heel. Other than those reasons, they’d be a good fit.

Because, however, I’m much more pragmatic than that, I’d go with these little slippers. Aren’t they cute? They would also keep me closer to the floor which is a very good thing (I like to think of myself as being grounded even while following my sparkle brain tendencies).  This little number is only $20 per foot through (they don’t know me, just thought I’d let you know of a site with good deals and where I got these pictures).

I can say that my “Opportunity Cost” for these little blue shoes was $1160 and feel like I really got a deal, especially since it didn’t come out of my pocket and I wouldn’t have been able to drive my car in the other pair.

I hope you feel like you’ve been enlightened. Or at least, that you can now say that you’ve seen a pair of shoes selling for what you could have bought a refrigerator for with the “Opportunity Cost”.



2 responses to “There is Always a Cost

  1. Okay – so first, it is nice to read a blog that is enjoyable and not one that is repetition of facts. Now my thoughts….

    I think this is an extremely basic example, and the concept is generally more applicable to firms and the choices they make in terms of what they didn’t choose. Also, if you are not willing or able to pay the $1200 I’m not sure it could be considered the opportunity cost. To relate more to your example, a pair of shoes that you may be willing and able to buy would be better suited for the analysis.

    • Hi Kate:

      Yeah, I was thinking that it was more applicable to hiring and firms after I’d written it, but I was having fun with the beautiful shoes. My real posts on Germany are available when you hover your mouse over the Macroeconomics tab. I want to be able to separate the two so that each would post only under their specific page but haven’t figured that out yet.

      Thank you for your kind words. I’m having fun with this and am interested in seeing what I come up with next.


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