The Opportunity Cost of Systemic Racism

What People are Losing When They Think They’re Winning

https://commons.wikimedia.org/wiki/File:PPF_opportunity_cost-ta.svg

Though I don’t use it much, I have an economics degree, and one of my favorite concepts was “opportunity cost.” The technical definitions can get complex, but opportunity cost can be described as what you give up when making choices. A friend offers you $100 to help them move. You’ve promised your daughter you’d take her to the zoo that day. My friends rarely provide much more than Kentucky Fried Chicken to help move, but in this case, the opportunity cost of going to the zoo is $100.

Formula for Calculating Opportunity Cost

Opportunity Cost=FO−COwhere:FO=Return on best forgone optionCO=Return on chosen option​Opportunity Cost=FO−COwhere:FO=Return on best forgone optionCO=Return on chosen option​

The formula for calculating an opportunity cost is simply the difference between the expected returns of each option. Consider a company that is faced with the following two mutually exclusive options:

Option A: Invest excess capital in the stock market

Option B: Invest excess capital back into the business for new equipment to increase production

There may be an intrinsic value of taking your daughter to the zoo and negative ramifications…