Opportunity Cost of Purchasing

Pioneer would be buying a $700 Sony and $300 worth CDC. It may seem buying Sony and the CDC is a better options. However, the reason why Pioneer has a higher price than Sony may be that Pioneer stereo has a better quality. So the opportunity cost of buying Sony stereo and CDC would be the high quality music that Pioneer stereo can provide. Therefore, the facts which can affect my decision would be my preference between high quality music and $300 worth CDC. If I do not care about the quality of the music, I would hooch the Sony and CDC.

If I care about the quality of the music and suppose that Pioneer can provide better quality music, Pioneer would be my choice. Moreover, the article mentioned that the buyer spent an hour debating between the different stereos. The one hour he or she spent also can be considering as an opportunity cost. For example, if the person could earn $10 in an hour from working. The opportunity cost for spending an hour to choice a stereo would be $10. For the second example, the opportunity cost of purchasing a diamond would be redoing the kitchen this year.

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However, that is the advertising strategy. Suppose that two diamond earrings cost you $1000 which is the same amount of redo your kitchen. The actual opportunity cost would be everything you can do with this $1000. The opportunity cost can be buying a $1000 Pioneer stereo to enjoy the music. Therefore, buying the diamond earrings or not, its depending on the person want to have a pair of diamond earrings or spending the money on any other products or things. For the third example, the opportunity cost of buying a bomber is building schools in more than 30 cities.

However, if we spend the money to build schools in more than 30 cities, the opportunity cost would be buying a bomber to provide nation security. The decision making in here is depending on the decision maker wants to have stronger army on the battle field or he wants to provide the schools, farms, houses to the citizens. Overall, the opportunity cost is the things that you have to give up when you made a decision. Because the time and resources are limited, when a decision is made, there must be an opportunity cost. Opportunity Cost of Purchasing By fecklessly 23