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Chapter 2: Q 1 (page 45)

Define opportunity cost. What is your opportunity cost of attending a class at 11:00 A.M.? How does it differ from your opportunity cost of attending a class at 8:00 A.M.?

Short Answer

Expert verified

Opportunity cost is the opportunity forgone in order to gain benefit from the next best alternative.

If you are early riser the opportunity cost at 8:00A.M. is lower than at 11:00A.M.

If you value your sleep more the opportunity cost at 11:00A.M. is higher than at 8:00A.M.

Step by step solution

01

Step 1. Given Information.

The objective is to define opportunity cost. Explain the opportunity cost of attending class at 11:00 A.M. and attending class at 8:00 A.M.

02

Step 2. Opportunity cost.

Opportunity cost is the lost opportunity to obtain the satisfaction of the next best alternative among the available choices.

03

Step 3. The opportunity cost of attending class.

The cost of the opportunity will be less to attend the class at 8:00 a.m. than to attend the class at 11:00 a.m. if you are an early riser because you will have time available for various activities.

The opportunity cost of attending class at 11:00 AM will be higher than attending class at 8:00 AM if you value an extra hour of sleep.

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If you receive a ticket to a concert at no charge, what, if anything, is your opportunity cost of attending the concert? How does your opportunity cost change if miserable weather on the night of the concert requires you to leave much earlier for the concert hall and greatly extends the time it takes to get home afterward?

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