Simon is given a free ticket to see Coldplay Saturday night. He already has a ticket to see Sting in concert that night. The Sting ticket cost Simon $50 though he would have paid as much as $80 to go to the show
Simon knows that he can easily sell the Sting ticket on Craigslist for $60. What is his opportunity cost of seeing Coldplay?
If Simon did not go to Coldplay, he would see Sting, since he values seeing Sting for more than the resale value of the ticket. If he goes to Coldplay he can sell the Sting ticket, making an economic loss of $20 (80 - 60). Thus, the opportunity cost of seeing Coldplay is $20. Note: the $50 is not relevant in the calculations because the resale value is $60, not $50.
You might also like to view...
For a single-price monopolist,
A) MR = P. B) MR < P. C) MR first increases and then decreases with the quantity sold. D) MR first decreases and then increases with the quantity sold.
When all firms and potential firms in a market have the same cost curves, the long-run equilibrium of a competitive market with free entry and exit will be characterized by firms
a. earning small but positive economic profits. b. facing the prospect of future losses. c. operating at the efficient scale. d. that work together to raise market prices.
Refer to the information provided in Table 24.8 below to answer the question(s) that follow.Table 24.8All Figures in Billions of DollarsOutput (Income)Net TaxesConsumption Spending (C = 100 + 0.9Yd)SavingsPlannedInvestment PurchasesGovernment Spending2,6001002,3501501502002,8001002,5301701502003,0001002,7101901502003,2001002,8902101502003,4001003,0702301502003,6001003,2502501502003,8001003,430270150200Refer to Table 24.8. If taxes are reduced from $100 billion to $50 billion, the new equilibrium level of output is
A. $4,050 billion. B. $3,850 billion. C. $2,100 billion. D. $1,600 billion.
Policies focused on putting people to work by having them construct parks would be considered
A. demand-side policies. B. demand-side and supply-side policies. C. monetary policies. D. supply-side policies.