How would the idea of opportunity cost help the individual's choice of occupation?
Understanding the opportunity cost will help a person entering into a career field properly analyze their decision. The opportunity cost is the resource cost to pursue one avenue of opportunity. It is not necessarily a real cost, but can be associated with a direct financial cost. For example, suppose you choose to invest in Company A and get a 5% net gain. If you had selected Company B, you would have received a 10% net gain. The opportunity cost is 5%. You did not lose any money but investing in Company A cost you the opportunity to gain more money via investing in Company B.
Applying this concept to career planning is important. By analyzing the opportunity cost of one career over another, a better picture can be gained of the future. Becoming a medical doctor requires many years of schooling plus certification requirements post graduation. There is also the cost of medical school. These are all opportunity costs versus going to a trade school for welding as an example. The intensity of medical school will cost more time, but equate to more income potential in the future. This is an important aspect of career planning; defining what is important to the individual. Some people place freedom of movement over monetary gain while others choose fast-paced careers for the societal status. There are opportunity costs associated with each and evaluating the individual desires will help quantify these opportunity costs.