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Chapter 2: Q 4 (page 45)

After the concert discussed in Problems, 2-3 is over and you and your friend are traveling home, you discuss how each of you might otherwise have used the four hours devoted to attending the concert. The four hours could have been used to study, watch a sporting event on TV, or get some extra sleep. Your friend decides that if she had not spent four hours attending the concert, she would have chosen to study, and you reply that you otherwise would have watched the televised sporting event. Identify the relevant opportunity costs for you and your friend for allocating your four hours to attending the concert. Explain briefly.

Short Answer

Expert verified

The opportunity cost for you is televised sporting event and the opportunity cost for your friend is study.

Step by step solution

01

Step 1. Opportunity Cost

Opportunity cost is the cost foregone for the alternative choices to satisfy wants.

02

Step 2. The opportunity cost for each person.

The opportunity cost for you is a televised sporting event and the opportunity cost for your friend is studying because these are the opportunities that they will miss for attending the concert ticket for four hours.

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Most popular questions from this chapter

Construct a production possibilities curve for a nation facing increasing opportunity costs for producing food and video games. Show how the PPC

changes have given the following events.

(a) A new and better fertilizer is invented.

(b) Immigration occurs, and immigrants’ labor can be employed in both the agricultural sector and the video game sector.

(c) A new programming language is invented that is less costly to code and is more memory-efficient, enabling the use of smaller game cartridges.

(d) A heat wave and drought result in a 10 percent decrease in usable farmland.

Why do you suppose that economists have estimated the dollar value of the combined opportunity costs of time that U.S. commuters spend in gridlocked traffic to be in excess of $150billion per year? Explain your reasoning.

Based on the information provided in Problems 2-6, what is the opportunity cost to this student of allocating enough additional study time on economics to move her grade up from a 90 to a 100?

The following table illustrates the points a student can earn on examinations in economics and biology if the student uses all available hours for study. Plot this student’s production possibilities curve. Does the PPC illustrate the law of increasing additional costs?

EconomicsBiology
10040
9060
8075
7085
6093
5098
40100

Suppose that in Fig 2-2, the nation currently is producing combination D in the table and on the graph of the production possibilities curve. What is the opportunity cost of producing 5 million more smartphones and moving to production combination C?
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