Question

You are given a ticket to a Bob Dylan concert. The face value of the ticket is $50. You value attending the Bob Dylan concert at $40. You can sell the ticket to a friend for $10 and attend a U2 concert by getting a ticket priced at $60. The opportunity cost of attending the U2 concert is:

A) $10.
B) $90.
C) $40.
D) $50.

Answer 1

Answer:

B) $90.

Explanation:

Opportunity cost is expressed as the value of the forfeited next best alternative. The opportunity cost of attending the U2 concert will be the value of the missed benefits, equivalent to the cost of attending the show. The total amount associated with attending the U2 concert represents the opportunity cost. The reason being that the amount could have been used for other purposes.

The cost of attending the concert will be as follows.

1. The actual cost of the U2 concert, which is $60  
2. The opportunity cost of not attending the Bob Dylan concert.

The opportunity cost of bob Dylan's cost is the value placed on the ticket, which is $40. Since you sold the ticket is sold for $10; the opportunity cost reduces to $30.

The coast associated with the U2 concert will be $60+$30= $90, and it will be the opportunity cost of attending the concert.