Question

Suppose you won a free ticket to a three-hour Katy Perry concert. At the box office, the ticket would cost $140.00. If you do not go tothe concert, you could instead work on a project for which you are being paid $31.00 per hour.The opportunity cost of going to the Katy Perry concert is $______

Answer 1

Simply put, opportunity cost is the loss you incur for choosing something because of other alternatives.

Now, if you choose to go to the Katy Perry concert, the ticket costs $140. But you aren't paying because you got it for free!

On the other hand, if you don't go, you can word on a project at $31 per hour for 3 hours, that would give you:

31 * 3 = $93

Thus, you can earn a potential $93 by not going to the concert. If you choose to go to the concert, you are forgoing the potential of earning $93!

Thus, we can say:

The opportunity cost of going to the Katy Perry concert is $93