Question

Finally, consider perhaps the most difficult concept connected to opportunity cost. Suppose that you have purchased the ticket for $50. There is no scalping market. (People can buy tickets at the box office and it is illegal to buy or sell tickets from or to anyone else.) Also, suppose that the box office will not refund the ticket price once the ticket has been purchased.

What is your opportunity cost of attending the concert in this case?

a. Zero, plus what I would have done with my time.
b. $50, plus what I would have done with my time.
c. $120, plus what I would have done with my time.
d. None of the above

Answer 1

The opportunity cost of attending a concert with a non-refundable, non-transferable ticket is what the individual would have done with their time, not the $50 spent on the ticket.

Step-by-step explanation:

The student's question is about determining the opportunity cost of attending a concert given that they have already spent $50 on a non-refundable and non-transferable ticket. The correct opportunity cost in this scenario includes not just the price paid for the ticket, but also the value of the next best alternative foregone by attending the concert.

Since the sunk cost of the ticket ($50) cannot be recovered and does not affect the decision at the margin, the opportunity cost of attending the concert is not the $50 already spent, but rather what the individual would have done with their time instead of attending the concert. Thus, the correct answer to the student's question is option (a) Zero, plus what I would have done with my time.