You get free tickets to see the Beattles, which you cannot resell. Your best alternative is The Rolling Stones who are also playing the same night at a cost of $120. On any normal night you would be willing to pay up to $150 to see The Beattles. You decide to go see The Rolling Stones anyway. What is your opportunity cost? Explain.
2007-09-02 14:02:24 · 7 answers · asked by Anonymous in Social Science ➔ Economics
As the Beattles tickets were free, if you convert them into the Rolling Stones tickets, your opportunity cost is zero, because you gave up free tickets. However, if you traded them for $120 tickets, your opportunity cost would be considered to be $120. It is what you give up for another item that determines the opportunity cost.
See the "broken window fallacy" expounded by Frederic Bastiat in 1850...
2007-09-02 15:55:02 · answer #1 · answered by Nothingusefullearnedinschool 7 · 0⤊ 0⤋
Opportunity cost = the cost of whatever you give up to do something else.
For instance, if you go to college instead of taking a job now, your opportunity cost is the amount of money that you would've made working, plus the money that you have to spend for college.
In this case, you have to ask - what are you giving up to go see the Rolling Stones? You're giving up "free" tickets, plus you're paying $ 120. Since your alternative costs nothing (free tickets), then your opportunity cost is just the $ 120 you spend on the Rolling Stones, because otherwise, you wouldn't have spent anything.
2007-09-03 13:56:53 · answer #2 · answered by InvisibleHand 3 · 0⤊ 0⤋
Your opportunity cost is 150 dollars (Beatles concert foregone) + 120 dollars (ticket payment) = 270 dollars. Man this is some Stones fan.
2007-09-02 23:44:07 · answer #3 · answered by Econblogger 3 · 0⤊ 0⤋
I don't think you add the 150 to the 120, since the cost that night is just 120, but if you can trade (not sell), then that is another matter.
2007-09-03 04:40:08 · answer #4 · answered by Anonymous · 0⤊ 0⤋
The $30 consumer surplus + the utility of of the Beatles.
But, you will subtract that summation from the total utility from the Stones Concert. As long as your answer is greater than $0, you made the right decision!
2007-09-02 23:56:44 · answer #5 · answered by Anonymous · 0⤊ 0⤋
The opportunity cost is the next greatest thing that you give up to do something else.
2007-09-02 21:26:14 · answer #6 · answered by Anonymous · 0⤊ 1⤋
The Beatles were 20X better than The Stones will ever be.
2007-09-02 21:08:17 · answer #7 · answered by Anonymous · 0⤊ 2⤋