Priya is ice skating with her friends and having so much fun that she wants to skate for another hour. However, each hour of ice skating costs $8, plus a one-time skate rental fee of $5. In addition, skating for another hour will make Priya one hour late for her job, where she earns $13 per hour. What is Priya's opportunity cost of skating for another hour?

Question

Quizplus · Accepted Answer

The opportunity cost of Priya skating for another hour includes the direct cost of skating ($8) and the income she forfeits by not working ($13), totaling $21. The skate rental fee is a sunk cost and not considered in the opportunity cost for the additional hour.

Priya Is Ice Skating with Her Friends and Having So