Cost vs Oppotunity Cost! Dinner becomes expensive! (and ppf curve)

The cost of anything is what you pay for it whether the unit you are paying in money of a certain currency, in time or in trade/other mediums. For example the total cost of me going out to dinner with my friends would total around £20 (transport, food and drink costs).

The opportunity cost, is the next best alternative sacrificed or given up, which at the time of my invitation to dinner was only the evening time at home. Which I wouldn't have minded giving up because an evening out would trumps the stay in evening every time! However after arranging to go out I was asked by a neighbour to babysit the same evening. I politely declined as I did not want to let my friends down, but after deep consideration I phoned the neighbours back and said I was able to babysit. 

This was because going to the dinner before being offered the babysitting would have cost me, as mentioned, the straight cost of £20. Once offered the babysitting the cost for my evening out had more than doubled to around £50. The new opportunity cost of the dinner would now be the babysitting I declined and the payment I would have received (£30). This new offer would now mean that the cost of the dinner was much higher than before, ie the cost of the forgone £30 babysitting money and the £20 straight cost of the food and transport. So I apologised (a lot) and took the babysitting (after all I need every penny I can get as I am heavily fundraising for my school trip to India this summer and for a charity close to my heart called HCPT, to help handicapped children). I am very comfortable with this decision and my friends understand 100%!

PPF curve to help illustrate the opportunity cost as a topic

Sorry but this was the best photo I could get to illustrate the opportunity cost. This diagram is called a ppf curve or production possibility frontier. It shows by the blue line the maximum production  possibility for both goods. To change productivity from A to B there is a gain of 10 in the quantity of butter produced while only a 5 loss for the production of guns (so random I really couldn't find anything else!) and then when moving from C to D to gain 10 units of butter  there is a loss of 50 units of guns. Basically in this diagram it shows that in order to gain 10 units of butter different amounts of units of guns is needed to be forgone . The amount of guns that are needed to be given up to raise quantity of butter is the opportunity cost!

PHEW! please follow and spread the word about my blog to anyone and comment below if you have a blog of your own! whatever the content you blog about is! My aim is to gain all peoples interest in economics and understanding financial management! THANKS FOR READING! FOLLOW! AND COMMENT! <£ <3 xo Libby xo

JACKPOT!

Yesterday 2 friends and I decided to have a little fun and between us bought 3 lotto scratch cards (1 each) and agreed to split all winnings. We excitedly rubbed away on our cards... and it turns out that my card was a winner! Winning us £10!! we were overjoyed and split our winnings equally and were very happy to have gained £1.33 ;)

The loosing card I got to keep :(

...then one friend got greedy. I thought we should quit while we were ahead but the other two decided to have one more go! and of course I didn't want to miss out if they did happen to win big! ahah so i played.. only to find we lost it all! so after all of that we are all now 67p down! Ohh well I was worth a shot!

The point I am making with this post is that the lotto is usually just a gambol but as all business or money making ventures should be to me this was a calculated risk. There is approximately a one in 4.5 chance of becoming a winner of any amount and with 3 cards between us we had a 3 out of 4.5 chance of winning! This is obviously a risk with a higher probability of being a positive outcome (although winnings must be above £6 as of the 3 way split). And it turned out to be a good risk! however I didn't see this at the time but agreeing to take the second bash at big money was a bad probability as we would now have odds of 6 to 9 (2 to 3) and having already one the chances of us winning a second time was now 1 in 3! a much higher risk! and obviously we did not win again! so play smart and don't be tempted when the risk is not a calculated one!!

Anyone else had more luck with these?! xx libby xx

Welcome to my blog..

When starting a piece of writing I often have a hard time knowing where to begin and blogging is no exception, and that may be why I have put off starting this ECONOMIC / BUSINESS BLOG for so long, but I guess it is not as hard as made it out to be (look I've already written 3 lines!).

One of the things I guess, I should address, first up, on this blog is my target audience; I have been thinking about this for awhile and I have come to the conclusion that this blog will be best suited for young, enterprising individuals (young refering to your understanding of business/economics NOT just age!)  mainly because being a person of this category I feel that the language in this blog may not be of a high enough standard for 'proffesional' economists but will help learning and aspiring entrepreneurs.

 

When I was google searching for some economic/business blogs I felt many were written by university lecturers or people of a much higher economic understanding than myself, so I hope to enter, or start a new economic/business blogging community for young people with a drive for making money and understanding the economy! And please if you are a lecturer/teacher etc I would love the constructive criticism and any advice you can offer on making my posts economically correct and to a high standard!

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Please comment below if you write or know any good economic/business/money blogs! thanks for reading please follow me and make my day! <3 £>