Question

# Opportunity cost of 2 concerts: A person has the option to go to 2 different concerts....

Opportunity cost of 2 concerts: A person has the option to go to 2 different concerts. Both tickets cost \$165, but they value Concert A at \$240 and Concert B at \$165. To get to concert A, it would cost \$103 in gas and to get to concert B, it would cost \$5 in gas. Also, if they were to go to Concert B, they would get 2 less hours of sleep than if they were to Concert A. Given this information, what is the total opportunity cost of going to Concert A? Concert B?

SOLUTION:-

* The opportunity cost of going to concert A is to go to concert B. As the total cost of going to concert A is (\$240 + \$103) \$343 and total cost of concert B is (\$165 + \$5) \$170 which is almost 50% less that total cost of going to concert A. To get the same utility consumer will be spending more on concert A than on concert B, the consumer saves (\$343 - \$ 170) \$ \$173 by spending only \$170.

* Thus, the consumer will choose concert B as they will get same utility by sacrifising less than concert A. Consumer have to spend \$170 to go to concert B. Although the consumers will get 2 hours less sleep but still concert B is more profitable to the cosumer as they have to pay almost 50% cost over the total cost of Concert A.

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