Question

you and a friend decide to spend $100 each on concert tickets. each of you alternatively could have spent the $100 to purchase a textbook, a meal at a highly rated local restaurant, or several internet movie downloads. as you are on the way to the concert, your friend tells you that if she had not bought the concert ticket, she would have opted for a restaurant meal, and you reply that you otherwise would have downloaded several movies. the relevant opportunity costs for you and your friend of the concert tickets that you purchased are a. $100 for you and $100 for your friend. b. a textbook, a meal at a highly rated local restaurant, and several internet movie downloads for you and a textbook, a meal at a highly rated local restaurant, and several internet movie downloads for your friend. c. internet movie downloads for you and a meal at a highly rated local restaurant for your friend. d. any one of the following for you and your friend: a meal at a highly rated local restaurant, several internet movie downloads or a textbook.

Explanation:

Opportunity cost is the value of the next - best alternative foregone when a choice is made. For the friend, the next - best alternative to buying a concert ticket is a restaurant meal. For “you”, the next - best alternative to buying a concert ticket is several internet movie downloads. Option A is incorrect because it just considers the monetary cost, not the opportunity cost in terms of the foregone alternative. Option B is incorrect as it lists all alternatives, but opportunity cost is about the next - best alternative, not all alternatives. Option D is incorrect as it suggests any of the alternatives, but opportunity cost is the specific next - best alternative. So the relevant opportunity costs are internet movie downloads for you and a meal at a highly rated local restaurant for your friend.

Answer:

C. internet movie downloads for you and a meal at a highly rated local restaurant for your friend.