Opportunity%20cost - To save money recently, I've been...

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To save money recently, I’ve been walking and biking for short trips in my neighborhood instead of driving. Suddenly I have a lot more time to think. And because I make my living by writing about personal finance, it turns out I often find myself thinking deep thoughts about money. On a recent 2-1/2 mile walk home from the gym, I started wondering about trade-offs. What am I giving up by walking all of the time instead of driving? What am I gaining? (Besides time to think, that is.) Every purchase is a trade-off, of course. If you decide to spend $20,000 on a new car, you’re saying that’s worth more to you than 20 bicycles or four vacations to Europe or the down payment on a house. Every choice involves opportunity costs; when you choose one thing, you’re giving up others. Plus, what you’re giving up isn’t always financial. Or obvious. These trade-offs are natural, and we make them every day. But how often do we crunch the numbers to see which choice would actually be best? I’m willing to bet it doesn’t happen often.
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This note was uploaded on 01/18/2012 for the course MICROECONO 201 taught by Professor Alessandrodalpane during the Spring '11 term at European School of Economics, New York.

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Opportunity%20cost - To save money recently, I've been...

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