Opportunity Cost

December 2011 I was given my first paycheck working at my new job, The Original WOW! Burger, of around $500. Naturally, I had many things that I wanted to spend this money on, things such as food, clothes, gadgets, etc. However, it was also the Christmas season and I had certain obligations to get Christmas presents for my girlfriend Sara and my father. Of course, I spend the money buying a new jacket for my dad and new UGG boots for Sara. Not knowing the economic example I had just made, I had just weighed out my decisions and contemplated the opportunity cost of each of those decisions.

By spending the money on the various Christmas presents, my opportunity cost for making this decision could be a potentially infinite number of things. These could vary for just using the money on food and gas throughout the next couple of weeks to buying other goods I might find appealing. Furthermore, I could have also saved some or all of the money in a savings account in order to start saving money for a later time. Ultimately, I'm glad of the decision I made because It made the people I love happy.

The only question I have when thinking about the economic idea of opportunity cost, is it seems as though when looking back at a decision, since the opportunity cost can in most cases be so many great things, how is it very useful to economists?