What is the opportunity cost of seeing Eric Clapton?

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  • January 6, 2017 at 11:28 am #15703
    amandeep kathuria
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    You won a free ticket to see an Eric Clapton concert (which has no resale value). Bob Dylan is performing on the same night and is your next-best alternative activity. Tickets to see Dylan cost $40. You would be willing to pay up to $50 to see Dylan. Assume there are no other costs of seeing either performer. What is the opportunity cost of seeing Eric Clapton?
    a. $0
    b. $40
    c. $10
    d. $50

    January 6, 2017 at 11:29 am #15704
    amandeep kathuria
    Member

    Ans: (c) The opportunity cost of seeing Eric Clapton is $10 (which is the extra benefit that a person gets on seeing Dylan), since it is the benefit of next best alternative foregone. On seeing Clapton, the person foregoes a benefit worth $10, which is therefore the opportunity cost.

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