The Economics of an Oil Change

It took me a while to think of how the economic principles we have discussed in class have impacted my life, but after some thought I found an instance. Last week, I exercised one of the few skills I have when it comes to cars; the ability to change the oil, not rocket science, but hey it’s something. However, before I changed my oil, I had to decide whether or not it would be worth my time and money to do change it myself or have some auto shop change it for me. In other words I had to determine my opportunity cost. To make my decision I weighed the implicit and explicit costs of doing changing the oil myself against the costs of somebody else swapping the oil in my car.

When looking at the explicit costs, such as buying the filter and oil, my willingness to pay was around 25 dollars. So, when I eventually bought the items and the total came to 20 dollars I was happy to come away with a consumer surplus of 5 bucks. I’m all about saving a money anyway I can, no matter how much. I chose to do change the oil myself not because of the explicit costs but because of a combination of explicit and implicit costs. The implicit costs and opportunity costs in this case was time and I’m not one who likes to sit around and wait, I would rather be out doing something, because of this I did not want to sit around and wait for the half hour or so that I could be doing the same thing. I also did not want to risk the shop finding something wrong with my car or having to be billed for one of those hated mysterious costs.