You have a ticket to go to a concert by one of your favorite groups, the Hives, which you cannot resell. However, you can bu
y a ticket for $4040 to attend a talk by Steven Colbert, at the same time as the concert. You are willing to pay up to $8080 to hear Colbert. Given that there are no other costs involved in attending either event, what is your opportunity cost of attending the Hives concert?
The opportunity cost of attending the Hives concert is $4040
<u>Explanation:</u>
To calculate the opportunity cost we have to determine the benefit that we would forgo by attending the hives concert. Since I don't occur no additional fee to attend the hives concert, the opportunity cost is the forgone benefit of attending the Colbert concert.
As we value attending the Colbert concert at $7070 but we have to pay only $2525 our net benefit will be
Therefore, the opportunity cost is $4545 for attending the hives concert.
