Glamor Economics

Chapter 5

Chapter 1 Section 4 Why Yao Ming Didn't Entrance to University

What does Yao Ming's failure to pass the university entrance exam have to do with economics?This involves the concept of opportunity cost in economics.

Yao Ming, a member of the Houston Rockets in the US NBA, did not go to college. Why didn't he go to college?With Yao Ming's IQ, there is no problem at all in being admitted to university.However, it is a wise choice for him not to go to college, because he has the opportunity to play in the NBA.When he first arrived in the NBA, Yao Ming signed a 5-year contract with the Rockets. The Rockets paid him 7000 million US dollars, plus his usual advertising revenue, Yao Ming's annual income has exceeded 1 million US dollars.Yao Ming can also choose to go to university at the same time, and many prestigious schools in China and even abroad will give him admission letters.However, once Yao Ming chooses to go to university, his high income will be lost.Compared with continuing to play, the opportunity cost of Yao Ming choosing to go to college is much greater.Therefore, in the end Yao Ming chose to go to the United States to play basketball instead of going to college.

Economics is a science that teaches people how to choose, and opportunity cost is an important concept in it.We all face various choices in our lives, and we need to calculate the opportunity cost when choosing.When people face a decision, they need to compare the costs and benefits of each option. Only when they recognize the opportunity cost and make sure that the benefit is higher than the cost can they take the next step.The following is a typical example of opportunity cost in economics.

George is a very talented lad.He is studying at the famous Massachusetts Institute of Technology and will soon be in his third year of college. He has completed the required courses, and now he is faced with the problem of choosing a major.

What should he major in?He especially likes architecture - every weekend he goes to study the famous buildings in Boston, hoping that one day he can design such a building.At the same time, he likes computers and hopes to work in an attractive company with high wages.His parents also supported the choice of studying computer science, because MIT's computer science department is the most powerful, so why study architecture at MIT?

He must choose one of the two majors and give up one, although he likes both majors.If he decides to choose a computer major, it will be very troublesome to transfer to architecture, and it is equally difficult to transfer to computer major after choosing architecture.If he wants to study two majors at the same time, it will take more time and energy, and he may not be able to get a degree in the end, and his parents will need to subsidize the tuition for an extra year.

Ultimately, he chose to major in computer science and earned his degree in no time.However, in his life, he may have given up his favorite architecture.

We make tons of choices and decisions every day.When every economic man makes a decision, he will follow the principle of rationality, consider the opportunity cost and the maximum benefit, and then come up with his own optimal solution.Rationality is not to look at problems without any emotion, but to weigh the trade-offs with the best solution to make yourself live better.

(End of this chapter)