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Life Lesson: Opportunity Cost

Silence fell in the household as I rushed into the enemy base. Fighting through piles of enemy heroes and creeps, I looked at the time. It was 11:00PM. Dropping my sword on the last enemy structure, gushes of excitement overtook me. I turned to my clock again: 11:05PM. I realized the past five minutes had been worthwhile.

I value the chopping down of enemy structures at $80 an hour. The opportunity cost of doing so would be to lose an hour of sleep, which is valued at $70 an hour at the time. Feeling pleased that I had made $10, I started another game. The value of this second game falls to $70 per hour, obeying the law of diminishing marginal utility.

Slowly, I was no longer satisfied in slaughtering newbies in DotA, the game I had been playing. Just when I was getting ready to make the right economic decision to sleep, since sleeping was worth more than a third game, my friend sent me an instant message. I replied, stating my desire to sleep. He ignores my request and continues to chat with me. The topic of discussion soon turned into the interesting “which girl is the hottest.” Valuing this conversation at $80 an hour, I sacrificed yet another hour of sleep.

Finally, at 2:00AM, I became increasingly drowsy, and my demand for the scarce resource of sleep shot up, increasing the price of sleep to $80 an hour. After chatting for an hour, we came to the conclusion that Jessica Alba remains first on the list even though she became pregnant. The value drops to $75, below the value of sleep. I once again was faced with an economic situation: to sleep or not to sleep? Weighing my options, I shut my laptop down, turned the lights off, and tucked myself to bed.

It sure feels awesome to make the right decisions.

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