Why Are Opportunity Costs So Hard to See?
A new hamburger joint opened up near my house: roughly the fifth "gourmet" hamburger place within half-a-mile of me. They were right at the exact end of the upward market in high-end burgers, so that by the time they opened, the market was saturated and the place has sat basically empty since it opened: I rarely have seen more customers than employees inside. And they are on a high-rent street. I commented to my friend that they were sure to go out of business soon, but he replied, "No, two brothers run the place, and their parents own the building, so it basically costs them nothing to stay open." Well, it costs the brothers nothing, but it sure costs the parents a lot! Imagine a scenario where the parents had the storefront rented for $8,000 per month (what I guess the place would fetch), and the brothers tell them they want to rent another storefront, and ask to be funded $8,000 per month. The net effect on the parents wealth would be exactly the same: they ...