17 cost is the highest price to give up.

Frank Knight1885.1.7-1972.4.15? The founder of Chicago School.

Today I will explain the concept of cost to you.

Today I will explain the concept of cost to you. I believe everyone has heard the saying that there is no such thing as a free lunch, and that expense is the cost. Some people also like to call it opportunity cost. There is no distinction here, only that they mean the same thing. What's the cost? Cost refers to the highest option among other options that a person gives up in order to get something after making a choice. In the words of economist almen Archin, cost refers to the highest price of giving up.

In fact, in real life, no matter what you do, there will be costs. It can be said that costs are everywhere. Let me give you some examples.

A few years ago, there was a joke circulating on the Internet, saying that if Bill Gates dropped $ kloc-0/000, he wouldn't bend down to pick it up, because it would take four seconds to pick it up, and in these ten seconds, Bill Gates could concentrate on his work and earn $7,500. In other words, if Bill Gates used these four seconds to pick up 1 000 dollars on the ground, then Bill Gates would work four seconds less and lose $7,500. Therefore, it is the right choice for the richest man in the world not to pick up the money on the ground. This is the meaning of cost.

Actually, there are many examples of costs. For example, when each of us is working, we can't do other things, such as being with our family, so the price of our work is to give up the psychological satisfaction brought by being with our family.

The concept of cost sounds simple. He gave up the biggest price in one sentence, but it is hard to really understand this concept. Where is the difficulty? It's hard that when you get something, you don't know what the biggest price you give up is. Because there will be many options for the maximum price you give up, how do you know which of all the options is the highest one? For a simple example, if you fall in love with A, you can't fall in love with another B. At this time, the price of falling in love with A is to give up B, but the problem is that you don't fall in love with B! So how do you know that the happiness that A brings you must be greater than the biggest price you give up, that is, the happiness that B can bring you? The concept of cost is unfathomable because this is the difficulty.

The main points I will explain to you today include

I explained the concept of cost to you. We say this is the biggest price to give up.

I also explained to you that cost is widely used in real life, and it can be said that cost is everywhere.

Finally, we left a suspense. We said that the concept of cost is easier said than done. Of course, we will explain it in detail later. Here, we just want to remind beginners that we must take this concept seriously when we first start learning this module of cost.

Today's thinking questions are a bit difficult, one question and two questions.

China has two choices, either to build a plane or to build socks. We know that the cost of building an airplane is to give up producing socks, and the cost of producing socks is to give up building an airplane. So do you think it is expensive to build airplanes or produce socks in China? Why?

(2) When we explain the concept of cost, we say that this is the highest price given up in all options. My question is, can human imagination be regarded as one of all the choices to give up? Why?