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Showing posts with the label alternative costs

Just my thoughts #0729

The dew is small, but because of its transparent, convex lens-like shape, it captures everything around it in that tiny water droplet. The fact that such a small size can contain so much information is truly astonishing. Sometimes size matters, but material and shape are often more important. If your bowl is small, don’t be discouraged; it’s better to focus on the material and shape. Greatness makes no excuses. - 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”