a) Explain all opportunity cost that you consider when deciding whether to purch
ID: 1246238 • Letter: A
Question
a) Explain all opportunity cost that you consider when deciding whether to purchase tickets for and attend a concert for 3 hours in Boston on a Saturday night.b) How do the opportunity cost change if a friend gives you the tickets free of charge? Do you still incur opportunity costs? a) Explain all opportunity cost that you consider when deciding whether to purchase tickets for and attend a concert for 3 hours in Boston on a Saturday night.
b) How do the opportunity cost change if a friend gives you the tickets free of charge? Do you still incur opportunity costs?
Explanation / Answer
(a) Opportunity cost is defined as the cost of an alternative that must be give up in order to pursue a certain action. Opportunity cost not only include the explicit cost of the ticket but also the implicit value of other opportunities that must be forgone to attend the concert. Explicit cost: Money - You may use the money for purchasing tickets in other means (such as buying a present for yourself, go for a big feast and etc) Implicit cost: (1) Time - You may use the time for attending the concert in other means (stay at home to watch your favourite TV programme) (2) Any other cost: such as results of the exam (if you attend the concert, you have less time to revise, then you score poorer; if you choose not to go and stay at home to do revision, you score better) (b) Yes, although the explicit cost is now considered negligible, there is still implicit cost - time factors and any other implicit costs (any activities that you have to give up in order to go for the concert) Hope this helps!
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