Most of my students know of my aversion to anything having to do with monkeys. This story just goes to show that they are smarter and more cunning than we think...
Sunday, August 12, 2007
Monkey Business
Most of my students know of my aversion to anything having to do with monkeys. This story just goes to show that they are smarter and more cunning than we think...
Opportunity Cost
Two roads diverged in a wood, and I– I took the one less traveled by, And that has made all the difference—Robert Frost
The Economist.com has a nice definition of opportunity cost:
The true cost of something is what you give up to get it. This includes not only the money spent in buying (or doing) the something, but also the economic benefits (UTILITY) that you did without because you bought (or did) that particular something and thus can no longer buy (or do) something else.
The NFL draft is a popular example where opportunity costs are important. The draft is set up where draft picks are chosen sequentially, with each team having a set time to make a decision. Teams not only consider basic things like holes in the roster and which players are remaining, but they also consider possible alternatives—like choosing another player OR considering trades from other teams. Teams make mistakes when they pick a player too early–if they could have gotten the same player in a later round–or when they do not accurately gauge the value of their high pick to another team. Teams that fail to consider opportunity cost end up with some bad choices, and fans quickly voice their disagreement to management.
The Economist.com has a nice definition of opportunity cost:
The true cost of something is what you give up to get it. This includes not only the money spent in buying (or doing) the something, but also the economic benefits (UTILITY) that you did without because you bought (or did) that particular something and thus can no longer buy (or do) something else.
The NFL draft is a popular example where opportunity costs are important. The draft is set up where draft picks are chosen sequentially, with each team having a set time to make a decision. Teams not only consider basic things like holes in the roster and which players are remaining, but they also consider possible alternatives—like choosing another player OR considering trades from other teams. Teams make mistakes when they pick a player too early–if they could have gotten the same player in a later round–or when they do not accurately gauge the value of their high pick to another team. Teams that fail to consider opportunity cost end up with some bad choices, and fans quickly voice their disagreement to management.
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