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When you are trying to make a cost benefits analysis, you have to weigh the pro's and con's of every option; these are called opportunity costs, opportunity costs are what you choose NOT to buy. The cost, is that you did NOT get this, the opportunity is what you got instead.

It is a subjective process due to the fact that it is an individually variable process; what I mean by this is, if 2 people have the same option to either have a car or a house, 1 guy picks the house so he will have shelter and he has a job that is really close to home, so walking or taking a bus wont cost much (walking and taking the bus is what he has to do, having the house is his opportunity, Not getting the car and having to walk/ride the bus is his cost). Now, the next man works very far into town, so taking a bus or walking is too expensive and too time consuming, so he will get the car and not the house, now he has the car and transport too work, but no house, so he will have to rent an apartment.

These 2 men had the same options, but they made different decisions bc they had a different viewpoint and the opportunity costs were different to them. So, this is subjective because it has to do with personal needs that differ from person to person, even if the options are the same for everyone.

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Eleazar Sanford

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2y ago

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