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Showing posts with the label alternative costs

Just my thoughts #0645

The human brain is controlled by the unconscious mind. Voting to increase US school funding usually gains more support in schools than in churches. Conversely, votes on abortion in churches are often more opposed than in schools. When asked if the location affected their decision, voters often dismiss it as nonsense. Humans don’t realize that their behavior is driven by the unconscious. For example, if someone is holding hot coffee during a meeting, they are more likely to see me as warm. If they have iced coffee, they might see me as cold. This is based on studies in cognitive psychology. We are motivated by the unconscious, even if we don’t admit it. - Joseph’s “just my thoughts”

Just my thoughts #0070

In business, capital means business funds. A successful entrepreneur often says, "I started my business without any capital". It's partly true, but it's a lie. The entrepreneur just said that capital means only cash. However, all kinds of businesses need to be fundamentally business funds in any even not cash. The entrepreneur didn't count the founder's labor cost. No inputs, no outcomes. The uncounted labor costs are called "alternative costs" or "opportunity costs". This comes from comparative advantage. If the entrepreneur doesn't accept the uncounted labor cost as a debt, the entrepreneur is equivalent to losing the profit due to opportunity costs. Please always remember this. There is no free lunch in this world. - Joseph’s “just my thoughts”