Opportunity cost is the value of the second-best alternative that is passed up in place of any choice made. More specifically, “economists use the term to denote the full value of the best alternative that is given up, or forgone,” (Amacher, 2019). It can be something basic in terms of the value of a candy bar when passed up in favor of the choice of a Nutra-Grain bar as a snack, to more complex choices such as the example presented in this discussion.
The opportunity cost of the decision LeBron made would be equal to the value of the education passed up in place of entering the NBA draft. Opportunity cost placed on the value of education passed up, in place of taking employment, is complex. Assuming LeBron’s second best alternative to entering the NBA draft was to attend college under a scholarship, his opportunity cost would be forfeiting the free education he might have received while attending school. The value of that education is hard to determine. The actual cost of education for any of the schools that offered him a scholarship would have to be considered in both the dollar amount, to include tuition and all other expenses covered under the offered scholarships, and the value of the quality of life someone gains from their education. The specific degree plan he might have chosen to pursue while enrolled would also have to be considered. The value of a degree in computer science versus the value perusing a liberal arts major might have some differences.
I would absolutely have made the same decision LeBron made. I would also argue anyone who wouldn’t isn’t being rational. Any desired education aspirations one might have could easily be attained after just one year (let alone several) playing in the NBA under the initial contracts offered to LeBron. He had a winning lottery ticket and he cashed in. He can attend college any time he likes without any financial burden. Anyone would be nuts to not follow the same route if blessed with a similar talent that offered such lucrative contracts.
Amacher, R., & Pate, J. (2019). Principles of macroeconomics (2nd ed.). Chapter 1: Economics, Economic Methods, and Economic Policy. Retrieved from https://content.ashford.edu/
Define the opportunity cost in your words:
What is the opportunity cost?
According to our readings, “Every decision to produce or consume something means sacrificing the production or consumption of something else” (Amarcher, 2019). With this being said, opportunity cost is in my understanding is taking a loss over another choice that you would will be missing. I will use my sister-in-law’s situation for example. I believe my SIL has sacrificed most of her 20’s (she will be 30 this year) and has been completely devoted to studying non-stop all those years to finally obtain her PHD. Although she has finally reached her educational goal, she has missed countless days not being able to give her twin babies the motherly quality time babies need from their mother. The twins are one year old this month, she has grasped her goal and now she is able to get a bit more time in with her babies and provide for her entire family as well financially. She will also be opening up her own counseling practice. Her sacrifice has positively paid off now for her and her family that counts on her.
What was the opportunity cost for LeBron James when he determined to directly enter the NBA?
LeBron James’s opportunity cost was certainly not a bad choice. LeBron’s choice was made by another opportunity cost to turn down the 5.8 mil that fourth year to begin his college education. LeBron is now in the place to be able to purse his college pathway without having the need to worry about financial burdens.
Would you have skipped college if your opportunity cost had been that high? Explain:
LeBron’s opportunity cost was a wise one in my opinion. Mr. James yielded entering into college at the beginning that leads instant financial security and success. Years passed and LeBron James made another positive choice to pick back up where he once planned to accomplish, which was to start on his college education. He is a smart man and his life choices have brought him great success thus far. I would not have avoided college (young or old) because I know I want to be knowledgeable in the things I am not aware of. I hunger to be as knowledgeable as possible for the sake of my children and to teach them college is a pathway to success.
Amacher, R., & Pate, J. (2019). Principles of macroeconomics (2nd ed.). Retrieved from https://content.ashford.edu/ (Links to an external site.)Links to an external site.
There are four economic systems listed in our text book. Traditional, command, market, and mixed economies are each defined. A traditional economy resolves economic issues by using the answers to solutions used in the past (Amacher, 2019). These economies tend not to be sophisticated (Amacher, 2019). Command economies address economic issues through a central planning authority that makes all decisions regarding what and how to produce or serve (Amacher, 2019). A classic example of a command economy would be the former USSR. Market economies rely on incentives and self-interest behavior of the people within the society to determine production through market exchanges (Amacher, 2019). Finally, the mixed economy is a blend of any of the listed categories with most basic decisions favoring the market economy, but having some government (or command) involvement (Amacher, 2019).
The U.S. is a mixed economic system leaning mostly towards the market economy with elements of command economic systems blended in. The U.S. government factors in to the economic system in many areas through its direct and indirect involvement. One direct function the U.S. government provides is defense, which affects the economy through its massive budget. Other direct ways the government impacts the economy are utilized through redistribution of funds in the form of taxation.
Indirect government functions are numerous. Providing funding for education, infrastructure, agriculture, and medical insurance are just a few examples. There are many more every-day areas affected by the government through law and regulatory bodies that would simply be too numerous to list.
The U.S. government’s economic role is critical to the overall economy. Without government involvement and influence, our economy, and society as a whole, would be in chaos. Police & fire protection, suitable roads to travel on, safe airways, regulated banking and trade, financial assistance to the elderly or disabled, and not to mention, safe food to eat and water to drink, would all be questionable if not for government economic intervention.
The appropriate level of the government’s involvement in our economy can, and will be, argued far past any of our time in this life. Every aspect, of every economic platform is affected by government in some way. For the most part, those effects are positive towards our society. I feel the opinion of someone towards the level of government economic involvement is proportional to the level of affluence they might enjoy. Simply put, the rich mostly advocate for as little government involvement as possible and the poor will argue (or should be arguing) more is needed. This idea all boils down to how independent you might be and that independence mostly hinders on how wealthy you are.
Amacher, R., & Pate, J. (2019). Principles of macroeconomics (2nd ed.). Chapter 2: Markets, Governments, and Nations: The Organization of Economic Activity. Retrieved from https://content.ashford.edu/
- Briefly describe the types of economic systems. What is the United States’ economic system and what are the characteristics of this economy?
In all economies people plan, they think about the future and prepare for it. There are three different economies: the traditional economy, the command economy, and the market economy.
The traditional economy answers the basic economic questions by tradition, or custom. A traditional society is not highly sophisticated. Their main focus is food, clothing and shelter. Of course the type of food they cook, houses they build, and clothes they make depends on their their tradition. Traditional economies people plan for a future that will be much like the past.
The command economy, or planned economy, answers the basic economic questions through central command and control. A central planning authority makes all decisions regarding what and how to produce. In a command economy the government plans how to answer the production and consumption questions for society.
The market economy relies on incentives and the self-interested behavior of individuals to direct production and consumption through market exchanges. Consumers are able to vote with their dollars in order to determine what is produced and sold in a market. Suppliers primarily determine how to produce, they seek to maximize their profits and produce the good or service at the lowest possible cost. Goods and services are distributed to consumers who have the purchasing power to buy them. People with higher earnings have more votes in the form of dollars spent in the marketplace. Markets will only function if individual buyers and sellers possess ownership rights to the goods and services they want to exchange.
- What economic role or functions does the U.S. government conduct regularly?
The U.S government has many roles. A few roles would be the regulation of food and medicine that is allowed to be retailed. The government also regulates the schools, what they eat, what curriculum they learn, how old they have to be to start and finish, the requirement of immunizations and so on.
- Why is the U.S. government’s economic role important or unimportant for the U.S. economy? Discuss whether you favor a larger or smaller government role in the economy.
The U.S has a mixed economy, the government is important for the U.S economy because since the economy is mixed it has command economy traits and this allows the government to make decisions within the economy.
Amacher, R., & Pate, J. (2019). Principles of macroeconomics (2nd ed.). Retrieved from https://content.ashford.edu/