Suppose a ticket to a concert costs $39, and parking costs $5. Further, in order to watch the concert, you must miss 2 hours of work where your hourly wage is $15 per hour. The total opportunity cost of watching a concert is:

Question

Quizplus · Accepted Answer

Opportunity cost = value of the next best alternative foregone. In this case, the next best alternative is working. By watching the concert, you are giving up 2 hours of work where your hourly wage is $15 per hour, so the cost of that is:

2 hours x $15/hour = $30

In addition, you have to pay for the ticket and parking:

Ticket = $39
Parking = $5

Total cost = $39 + $5 +$30 = $74

Therefore, the best choice is to pay $74 to watch the concert.

Suppose a Ticket to a Concert Costs $39, and Parking