Opportunity Cost and Tradeoffs

- [Tyler] Once you master
the economic way of thinking,

you'll see the world
in a very different way.

Two fundamental economic concepts
are everywhere you look --

opportunity costs, and tradeoffs.

Let's start with opportunity costs.

At this busy coffee shop,

opportunity costs lie
behind every decision.

Like for Jenny -- she's here
for her third date with Adam.

Was that a good decision?

After all, economics is
all about studying decisions.

Making a good decision is
about comparing the benefits

of that decision to the costs.

The obvious costs for this date

for Jenny were the Uber ride
she paid for to get here,

and her grande chai tea latte
with whole milk.

But what's missing?

Her opportunity cost.

Opportunity cost means the value
of the next best alternative.