A final level shipping student and a friend of mine sort my clarification on opportunity cost in shipping. He had a very good illustration and my ego tell he wholly comprehends the concept: a ship owner, a ship, a charter party, cargo A and cargo B To clarify, opportunity cost refers to the cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action. In my student case, if the shipowner had an option of fixing his ship to load cargo A under relevant charter party but changed his mind to load cargo B due to several reasons known to him, the opportunity cost would be the benefits forgone by taking the second option other than option A. To get those benefits quantitatively, you simply work out the difference between the two option. Isnt the same case in econometrics?
Posted on: Thu, 08 Jan 2015 17:38:02 +0000
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