Opportunity Cost

This should have been a huge topic in the turmoilloaned their money in a different manner. It
of the last few greedy years of the bankingseems that greed sometimes overshadows
industry. May it actually was, which is even morethought when it comes to money.
insidious. What were they thinking when they lentThe same thing happens in concrete. If a precast
money to people who could barely afford theconcrete utility vault sells for more than a precast
minimum payment and then raised the secondhighway barrier, wouldn't it be better to make
payment to a point where these people weremore vaults? After all, if you can sell them the
struggling. On top of the new payment, the pricecompany would be better off financially. That is
of nearly everything has gone up such as foodthe way it would seem on the surface. The key
and gas. It is true that no person has a crystal ballphrase is if the company can sell them.
but many people have the availability of historyIf there aren't many orders for a precast
books to lend them a hand when making decisionsconcrete vault then it doesn't matter how many
about lending money to people.the company makes, they will sit on the yard and
It isn't rocket science to look at opportunity cost.not move. The opportunity cost of making the
If Las Vegas precast concrete has only so manyvaults may be to lose sales of barriers that are in
yards of concrete to make products with, theydemand. The sale of each barrier may not be as
have to determine which of those products toprofitable but the overall benefit to the company
make. Not making the others is the opportunitywill be far greater if the company uses the limited
cost. If the bankers would have looked at makingconcrete to make barriers. This makes it look
sound judgment calls based on history andsimple but it can really get to be quite complex
economics then they may have chosen aand can even make or break a company.
different way to look at opportunity cost and