Question

amanda purchased a non-refundable ticket to see a magic show. she spent $70 on the ticket, but was willing to spend as much as $100. because of the recent popularity of the show, scalpers are willing to pay $120 for the ticket. since she is planning on going to the show, amanda is no longer able to go to a party with friends. what is the true cost of her going to the show?

Answer 1

The true cost of attending the show includes the $70 spent on the ticket, the $50 foregone profit from not reselling the ticket, and the subjective opportunity cost of missing the party.

Step-by-step explanation:

The true cost of Amanda going to the show includes the opportunity cost of not attending the party, the potential profit from reselling the ticket, and the actual expenditure on the ticket. Amanda spent $70 on the ticket and was willing to spend up to $100, meaning she valued the ticket at least at that amount. Additionally, the ticket could be resold for $120 to scalpers, which presents a foregone profit of $50 ($120 - $70).

Finally, there's the opportunity cost represented by the enjoyment or benefits she would have received from attending the party with friends, which is subjective and cannot be precisely quantified. To calculate the true cost, one must consider both the explicit costs (the $70 ticket price) and the implicit costs (the party and potential resale profit).