What is the opportunity cost of buying a car?

Question

Please Help! I am totally stuck on this question. Can someone give me ideas on this topic. I already know that you would have to give up money, but what else?

Answer 1

The money that you have to give up could be used for other purposes....

For instance...
-keeping in the bank and having an emergency fund (giving up some financial security) while collecting interest and increasing your financial situation.
-investing money in stocks and possibly earning more.
-opening a small business and possibly increasing your cash flow

Anything else that you can imagine that you could do with that money other than buying that car is an opportunity cost.

Answer 2

The opportunity cost is weighed against the opportunity gain. For example: it might cost you thousands of dollars a year to own and maintain a car, but it broadens you range of activity [vs, say, walking] which could result in your ability to get a higher paying job, and make even more money than the car's costs.

However there are also other factors of "cost" that must be taken into account. For example: you wouldn't get as much exercise, which could cost you future medical bills; you could get a drunk driving charge, speeding tickets, or get into an accident, which would result in the additional cost of the fine, court costs, deductibles, increased insurance costs, medical problems [that could limit your abilities to do certain jobs], etc.

However these things would also have to be weighed against other benefits you would receive; further range of dating, not having to bare the elements and risk getting sick, independence and/or friendships gained, etc.

Answer 3

It's using the money for something else. By buying a car, you decide to forego other expenses (a vacation, paying down student loans, maybe even down payment on a house). What you have foregone by buying a car is your opportunity cost.

Answer 4

It not only describes the direct costs of buying the car, but how much time must be spent working to cover those costs. What other things must you give up or sacrifice to purchase the car.

Answer 5

I don't really understand your question but if it's what you give up or what it entails to be a car owner then: it does cost you money to buy one, you must maintain your car and that takes time and money, and gas costs you.
Pluses: you gain freedom to go some where whenever you want and wherever you want and you can use it to get to a job to make more money which is advantageous.

Answer 6

Dear friend, It is a nice thinking not to worry for money, but it is a lot easier said than done. I had same thought about 35 years ago. It was more aggressive. I wanted to be super rich too. I spent a lot of years working hard , thinking, trying many ways etc. and I want to share with you what I found in a couple of sentences. There is only one way to be really rich. It is by giving. "Give it shall be given to you..." . Jesus commented this years ago. It is valid even today. Give your tithe. Be generous with everyone you come across. Be a giver and not a taker. Life will give it back to you. Your tithe will take care of all your needs supernaturally. Human hearts will not understand this. But it is a very practical, but simple solution. No one who has tried this has ever failed. But you will come across several who will doubt. They are those who have never tried . Till I found this truth, I never became financially independent. May God Bless you.

Answer 7

Opportunity cost is made up of the other stuff you could have purchased instead.

Maybe you could have started taking the bus and bought a big screen tv.

Answer 8

this is a critical thinkin questoin... think of it this way. lets say u buy a car. What will you do with the car taht gets u more money? will u b able to work a few more hrs and cash in more or wut? I think i have the wrong definition of opportunity cost.. but define oportunity cost and fit that in with a car.

Answer 9

Unless the car is used in business or it is necessary to get you to your job, it is a non-income producing asset. The opportunity cost is the yield on other assets that produce income.

Answer 10

Time 2 maintence