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Opportunity Costs and Maximizing Happiness


It's no secret that people want to be happy. This means that they will make decisions based on what will make them happy, whether it's in the long run or the short run. Everybody wants to be happy and maximize their own happiness. But their own happiness is different for everyone.

Someone can maximize their happiness by making choices and opportunity costs. If they are choosing between a red car and a blue car, they might choose the blue car because that is what makes them the most happy. In that instance, the red car is the option foregone; therefore it is the opportunity cost. Even if you don't make a choice, you're still making a choice - and your choice is to save the decision for he future.

When trying to maximize your happiness, there are a couple things you need to keep in mind.

Spending is what you choose to spend your money on. Whatever you choose to spend your money on, that's your priority, which means it's what's most important to you. Spending is also what you choose to spend your time on. Spending time on certain things also depends on what your priorities are. But fun does not necessarily equal happy. Something may be fun but it may not make you happy in the long run, and vice versa - something may be boring, but make you happy in the future.

Saving is what money you put aside. Saving money for the future might make some people happy. You can save toward a goal, like a new bike, or just save in general. Saving means that you forego instant gratification in order to get something in the future. An example of this would be studying now, so you can get a good grade on a test. You're giving up watching T.V. so you can study in order to do well in school.

But there are some other things you need to consider in general. For example, money and widgets aren't the only things that can make us happy. Giving away money and time can still make us happy. Some companies or people give away money or time to preserve their reputation as a good company or person, or their standing in the community - how people view them.

Legally, businesses are people. They want to maximize their own happiness by making money, expanding, creating jobs, or having a good standing in the community. However, businesses wanting to make money often leads to them being greedy, which means wanting a lot of money. This can cause businesses to charge excessive money for things. Greed involves judgment.

You should also think about sunk costs. A sunk cost is the money that you spend. When you spend money on a product, you can't keep the product and get that money back. Using a widget that you spent money on won't bring the money back; that money is gone.

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