You won a free ticket to see the latest Star Trek movie this Friday night (which you can costlessly resell for its face value of $15). Your favorite band is also performing on Friday and is your only alternative activity. Friday is your last chance to see either the movie or the band. Tickets to see your favorite band cost $30, and on any given day, you would be willing to pay as much as $50 for a ticket. Based on this information, what is your opportunity cost of going to see the Star Trek movie on Friday?

Question

Quizplus · Accepted Answer

The opportunity cost of seeing the movie is the value of the next best alternative forgone, which is seeing the band. You would be willing to pay $50 for the band ticket, but it costs $30, so the consumer surplus is $20. Additionally, you forgo the $15 you could have gotten from selling the movie ticket. Thus, the opportunity cost is $20 + $15 = $35.

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