Question

Last Friday, Jan went to the theater to see a play called “Young Frankenstein,” which is based on her favorite funny film. She has been looking forward to seeing this play, and even gave up the opportunity to have dinner with her best friend (her next best alternative) in order to see the play. Jan pre-purchased her ticket months in advance for $100, but when the day came, and the ticket taker asked for her ticket, to her dismay she discovered she had lost it! The ticket taker explained that she would have to purchase another ticket in order to enter the theater. What is Jan’s opportunity cost of going to the theater?

Answer 1

Answer : When a person lost her second best choice for choosing the first best choice in limited budget then the second best choice create cost to the person which is known as opportunity cost.

According to the given information, Jan lost her second best choice which is dinner opportunity with her best friend due to advance booking of play ticket whose price is $100. As the play is Jan's favourite film , she don't want to spend $100 on dinner because $100 is the budget for her. Therefore, here Jan's opportunity cost is dinner with her best friend.