Saving "the Market” out of Cambridge: “Opportunity Cost”

 

Nothing good comes for free. In other words, we have to pay a price for anything desirable. That’s the Principle No. 1 of the Harvard economist Gregory Mankiw in his super-selling Principles of Economics: “People face trade-offs.”

             By the way, did you know that the book of economic principles has a 50-year Millite cycle? The cycle starts with J.S. Mill, Principles of Political Economy, 1848, to Alfred Marshall, Principles of Economics, 1890 to Paul Samuelson, Economics, 1948 to Gregory Mankiw, 1998 to Author You, Understanding Economic Correctly, 2048.  

             Suppose a boy named Donald. He has a long list of girls in order of preference as candidate of soul mate, lifetime or otherwise, subject to monogamy from Constitution: Audrey, Elizabeth, Kate, Natalie, Ann, Ivoña, Milaña, Stormy, Jean and all the way down to la niña Kerr Mala.

             Unfortunately, the first five of them are not available to him for various reasons. We count out the unavailable because of irrelevancy in the equation.

             Somehow, Donald chooses Milaña even if Ivoña gets a higher priority. Question: Who is the opportunity cost of such a choice? A unique answer, multiple choices or up to Donald? Well, the article “the” means only one, that is, “Ivoña” as the single best opportunity foregone.

             Another Question: What is the opportunity cost of “liquidity preference” or “money demand” as called in Cambridge macroeconomics?

             Depending on the answer, we can tell who you are:

1)     “The interest rate”: Macroeconomist such as Gregory Mankiw in Cambridge

** Between you and me, by the way, there is no such thing as “the interest rate” in the earthly world. Interest rates are by definition speculative and personal. .

2)     “A piece of bread”: Daily bread-earner at the end of the day

3)     “A place to sleep in”: Homeless in the dark

4)     “Darkness”: Audrey Hepburn waiting until dark

5)     “A life jacket”: Leonardo DiCaprio on the Titanic

6)     “Indolence”: Student of Thomas Malthus

7)     “Sushi”: Alicia back home after studying economics so hard

8)      “Apples at the margin”: Mom in grocery shopping

9)      “Solid cash and thin-airy bank deposits”: One at the brink from Here to Eternity

- For the purpose of buying the one-way ticket to Heaven, or

  Detouring all the roads to Hell

- To leave all the choices to free will of Alter Egos