Thursday, October 31, 2013

Economically speaking, would Bill Gates pick up a dollar on the street?

Speaking strictly from an economic point of view, it would probably not make sense for Bill Gates to take the time to pick up a dollar.


The reasoning behind this is tied to the idea of opportunity cost.  If Gates stops to pick up the dollar, he has used X number of seconds of his time.  He will now not be able to use this time to do something else.


Given how much money Bill Gates makes, it is likely that he could have done something with those seconds that would have been worth more than $1. In that case, the opportunity cost of picking up the dollar would be higher than the value of the dollar.


So, if we assume that Gates could have done something that would have made more money, he shouldn't pick up the dollar.

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