Fungibility and Opportunity Cost (old)

Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution. It refers only to the equivalence of each unit of a commodity with other units of the same commodity. Basically, Gevlon's idea that your herbs from farming are identical to herbs purchased from the AH and should be treated as if you had, in fact, purchased them from the AH in terms of appraising their value. 

Opportunity cost is the value of the next-best choice available to someone who has picked between several mutually exclusive choices. In WoW terms, you can only use your time in WoW for one activity at a time. If you run instances, the opportunity cost is the amount of gold you would have made running dailies, farming, or playing the AH. If you chose to farm instead, the opportunity cost would be the emblems you would have made running heroics. It's basically the concept that to do one thing, you must choose not to do something else. So where am I going with this? I thought of it when I saw the comment about how heroics are good money. It's true to an extent, 500g is 500g no matter how you got it. However, it's ignoring a very important concept to someone who wants to make a good sum of gold: Time. Time is money is true in wow. In any gold generating activity you perform, you are trading time for money. Dailies and Farming are pretty obvious time for money trades. People who play the AH like to pretend they're trading money for money, but there is still time spent scanning the AH, processing products, studying markets, and so on. What they're actually doing is leveraging money to greatly increase the ratio of gold they acquire for their time spent. I use two measures of wealth: gold per day and gold per hour. Gold per Day is a measure of the success of all of your given gold generating activities in a given day, ignoring the amount of time you spent performing them during the day. Gold per Hour is a measure of how quickly an activity will generate gold. A useful analogy is Gold per Day would be like distance travelled during a day and gold per hour is the velocity in which you travelled that distance. Someone who made 500g in a day might have spent 10 hours making 50g / hour or 1 hour making 500g. Given the choice, you obviously want to do the latter. The reasoning for this is simple. It frees you up to do other things with your time that aren't directly generating gold. Alternately, you can use that free time generated by higher gold per hour and use it to acquire *even more gold.* You'll find as you start acquiring more money, that time is the limiting factor and in order to increase gold, you need to increase your rate. Gold per hour is primarily useful for assessing the opportunity cost of a given action. In other words, to provide a basis of comparison for gold making activities. Dailies can be as high as 320 g/hr. Let's say you can do 1 hour per day of dailies. Farming can vary. For the sake of argument, I'll assign it an arbitrary value of 200g/hr. Let's say you make 250g/hr playing the auction house. You can do this for 2 hours. If your only activity for making gold in a day is farming, your opportunity cost is the gold you would have made from dailies or playing the AH. In this case, the opportunity cost for farming would be 120g for the first hour of farming, then 50g/hr for the next 2 hours. Total, you've lost 220g. Basically, you should prioritize the higher g/hr activities--choosing the lower ones is the same as losing gold. I was wondering how good the Heroic gold was so I sat down and did some napkin math. An emblem of triumph is worth roughly 17g. (10 = 1 epic gem, valued 170g). I estimate many heroics give 5 emblems and 13g for 20 minutes of work. You can run 3 heroics in an hour, so the gold per hour value of heroics is 3*[(17*5)+13] That is to say, 294 g/hr. In other words, it's a pretty lucrative activity! It's nearly on par with Crusader argent tourney dailies, and it's not counting any DE mats / loot you get while running them. Of course, no one really runs heroics with the intent of acquiring gems, but the emblems are worth 17g per all the same. Yes, that means your t9 chest basically cost you 850g.