109k views
0 votes
Suppose, as your birthday gift, your best friend give you a 4-day general admission ticket for Bonnaroo 2018 with a market value of $554.50. What is your opportunity cost of going to Bonnaroo this year using the free ticket?

1 Answer

3 votes

Answer:

Cost of 4 days time: In terms of earnings sacrifised from those working days, or any qualitative value of that time.

Step-by-step explanation:

Opportunity Cost is the cost of next best alternative sacrifised while choosing an alternative.

It might be material, immaterial .

  • Eg1: Working at Job1 with salary 10000, having other job option with salary 8000. Opportunity cost of Job1 is Job2 salary.
  • Eg2: Me preferring Chapati over rice, opportunity cost of consuming Chapati is rice' satisfaction.

Eg 1 has material (monetary) opportunity cost i.e salary. Eg 2 has immaterial opportunity cost i.e satisfaction.

Admission ticket for Bonnarro would have had opportunity cost = its price i.e $554.50 as the amount sacrifised to get that. However: as given the ticket is gifted free ; the opportunity cost of that is 4 days time sacrifised to attend it. The value of that sacrifised time may be in form of :- earnings lost from those 4 working days sacrifised (material) ; or 4 days time to be spent with family sacrifised (immaterial).

User Rommel
by
7.6k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.