2 (a) Suppose that you are a flower seller, with a stock of cut roses that will

Question

2 (a) Suppose that you are a flower seller, with a stock of cut roses that will wilt by tomorrow morning. If you do not sell them tonight, their value tomorrow will be Zero. You can think of two possible places to sell your flowers- on the side walk outside your home or downtown in upscale romantic restaurants where you can embarrass people into buying flowers for their dates. However, to get into these restaurants, you have to pay off the headwaiter ($30) and it will cost you $10 in extra time and bus fares to travel downtown. Suppose that you expect to sell them all in an hour wherever you are and expect to be able to get about $50 for your flowers if you go downtown. You do not have anything else to do during the time you will spend selling flowers. What would be the opportunity cost of selling them on the sidewalk? (b) Consider your decision whether to go skiing for the weekend. Suppose transportation, lift tickets, and accommodation for the weekend will cost $300. Suppose also that restaurant food for the weekend will cost $75. Finally, suppose you have a weekend job that you will have to miss if you go skiing, which pays you $120 (after tax) for the one weekend day that you work. What is the opportunity cost of going Skiing? Let

Explanation / Answer

opportunity cost is simple the basic definition that you have to remember is that its "the next best alternative forgone" which basically means its the thing you sacrifice by choosing your preferred option. In this case the opportunity cost would be all the money you are giving up to go so that would be 300+75+120=$495 hope this helps :)

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