Opportunity Cost can be defined as the value of the next best thing you are giving up when you are making an economic choice to purchase or acquire something. Opportunity Cost relates to the content presented in the video because of certain automobiles being street legal, while others are not. In Mexico, Europe, India, and China they are making new cars that are selling for what would be dirt cheap in the United States. The only problem is that these cars are illegal in the United States because of road safety laws among many other things. Tariffs also play a role because some certain tariffs are raising the prices of foreign cars in the United States in order to influence people to buy the cheaper American made cars so that money is circulating more within our nation. Although this is a very good thing that American companies are receiving more profits and money is circulating in the United States more, the opportunity Cost is Americans are not able to afford these other cars which may very well be better quality and cheaper if it wasn't for the tariffs. Also, the opportunity cost of making those certain foreign cars illegal in the US is the average American is not able to purchase those cheaper cars which would just as well or even better and the individual American is saving less money when purchasing cars.
In reply to Brady Ellington
Re: Opportunity Cost in relation to the automobile industry.
by Abigail Pepple -
Good point that America is sort of missing out on an opportunity cost.
In reply to Brady Ellington
Re: Opportunity Cost in relation to the automobile industry.
by Danny Weaver -
Very good. Yes, tariffs and non-tariff barriers like the regulations making foreign budget models illegal is good for the US auto manufacturing industry, at least in the short term. However, everyone else is made worse off as the opportunity cost you illustrated is born by everyone who buys cars. Given that this is an overwhelming majority of the voting population, why are tariffs enacted if they make a majority of voters worse off?
In reply to Brady Ellington
Re: Opportunity Cost in relation to the automobile industry.
by Cruz Rothenbush -
I agree that even though the American car industry is benefiting from the tariffs, there is also an opportunity cost through the option of buying more affordable cars from outside the United States.