Question

People often work long hours even when their professional or financial situation would enable them to dial back. A key concept in this context is that of the opportunity cost of leisure. How is this concept best explained?

Answer 1

Answer:

Opportunity cost is what is given up to obtain something, or the cost of doing something instead of another thing.

The opportunity cost of leisure would be best explained as the monetary value of time spent not working, or in other words, the income that is not received when you are not working.

For example, if a person works 8 hours a day, five days a week, making $20/hour, he will earn, by the end of the week, a total of $800 dollars. However, if he decides to cut back his hours in order to go to swimming classes in the afternoon, and now works 6 hours a day, five days a week, he will now make $600 dollars, so the opportunity cost of leisure for him is $200 dollars.