Time Restrictions and the Price of Opportunity

Time Restrictions: Time, something that we all lack of, not to mention that it is one of the most valuable resources. What makes it worse yet is that time is a fixed supply. In this way, the best thing that technology can do is allow us to produce more in the limited amount of time we have, or provide us with a few more years of life through better medical technology.

Nonetheless, even with a longer life, nobody can be in two places at the same time. If we could, time would not really be a limit, because this would mean that you would be able to do twice as much work in the same amount of time. Due to the fact that we can only be in one place at a time, we are constantly forced to choose what represents the best use possible of this moment.

The Price of Opportunity: The economical idea of price of opportunity is intimately related with the idea of restriction of time. You can only do one thing at a time, in other words, unfortunately, you have to sacrifice other things.

The price of opportunity of any activity is the value of the best alternative that you could have done instead of another. Everyday we have to choose what sort of things we think are more beneficial to do. For example instead of staying home and watching television on the weekend, you might have chosen to take your kids out for ice cream, as this gave you more satisfaction and happiness.

The price of opportunity only depends on the value of the best alternative. It does not matter if you have five alternatives or if you have thousands. The price of opportunity is simply the value of the best alternative because you can always reduce a complicated selection with many options, to a simple selection between two things: option X against the best of all the other alternatives.

The price of opportunity can give you an indicator of when to do things and when not to do them. For example, maybe you are the type of person that really likes eating chocolate, however you have more of a knack for pretzels. If you were only offered chocolate, you would most likely take it; however if you were offered both chocolate and pretzels you would probably take the pretzels. The price of opportunity of eating your pretzels is not eating the chocolate. Since the price of not eating pretzels is greater than the benefits of eating chocolate, it would not make sense for you to choose the chocolate.

Of course if you were to choose the pretzels you will still need to face the price of opportunity of sacrificing the chocolate; but you will be willing to do this because for you the price of opportunity of chocolate is less than the benefits of pretzels. The prices of opportunity impose inevitable restrictions in the behavior because you always need to choose what is best and are obligated to sacrifice the second best alternative.