![]() We have constructed budgets for 10 different types of families in each area. The size of a family dramatically affects the budget needed to maintain a modest yet adequate standard of living. View the EPI Family Budget Calculator Definitions of families Other specific changes to the methodology of individual components of the family budget calculator are noted within the description of each component. Previous versions of the calculator did not include county-level data they included data for the metropolitan areas along with data for rural (nonmetropolitan) areas by state. counties and county equivalents and for all 613 metropolitan areas. The calculator now includes data for all 3,142 U.S. If 2020 data were unavailable, we used data from the latest available year inflated to 2020 dollars with the budget-item-appropriate inflator. The budget calculator draws upon the most recent reliable data, which in many instances is data for 2020. Compared with the federal poverty line and the Supplemental Poverty Measure, EPI’s family budgets provide a more accurate and complete measure of economic security in America. The budgets estimate community-specific costs for 10 family types (one or two adults with zero to four children). EPI’s Family Budget Calculator measures the monthly income a family needs in order to attain a modest yet adequate standard of living. Opportunity cost is a key concept in economics, described as the fundamental relationship between scarcity and choice.This paper presents the methodology and data sources used in the 2022 update of the Economic Policy Institute’s Family Budget Calculator. The actual cost of lost time, lost production, or any other for-profit benefit shall also be considered an opportunity cost. Opportunity costs are not limited to monetary or financial costs. In simple terms, opportunity cost is our perceived benefit of not choosing the next best option when resources are limited. Through the analysis of opportunity cost, a company can choose a path where the actual benefits are greater than the opportunity cost, so that limited resources can be optimally used to achieve maximum efficiency. If there are decisions to be made that require no sacrifice, then these are cost free decisions with zero opportunity cost. The decision maker disregards the equivalent utility of the best alternative choice to gain the utility of the best perceived option. ![]() Sacrifice is a given measurement in opportunity cost. Time spent chasing after an income might have health problems like in presenteeism where instead of taking a sick day one avoids it for a salary or to be seen as being active. Yet, the opportunity forgone is the time spent walking which could have been used instead for other purposes such as earning an income. As an example, to go for a walk may not have any financial costs imbedded in to it. Opportunity cost also includes the utility or economic benefit an individual lost, if it is indeed more than the monetary payment or actions taken. In basic equation form, opportunity cost can be defined as: "Opportunity Cost = (returns on best Forgone Option) - (returns on Chosen Option)." The opportunity cost of mowing one’s own lawn for a doctor or a lawyer (who might otherwise make $100 an hour if they elected to work overtime during that time instead) would be higher than for a minimum-wage employee (who in the United States might earn $7.25 an hour), which would make the former more likely to hire someone else to mow their lawn for them. If your cost of transporting yourself without the car is more than what you get for renting out the car, the optimal choice is to use the car yourself. For example, if you buy a car and use it exclusively to transport yourself, you cannot rent it out, or if you rent it out you cannot use it to transport yourself. The optimal activity is the one that provides the greater return compared to any other activities. More effective it means if you chose one activity (for example, an investment) you are giving up the opportunity to do a different option. ![]() In microeconomic theory, the opportunity cost of a particular activity is the value or benefit given up by engaging in that activity, relative to engaging in an alternative activity.
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