Asked by Samuel Libertus on May 27, 2024
Verified
You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?
A) $0
B) $10
C) $40
D) $50
Next-Best Alternative
The best option available to someone after the top choice is taken away, frequently referenced in the context of opportunity cost.
Willie Nelson
A renowned American musician, actor, and activist, known for his contributions to country music.
- Acquire an understanding of the principle of consumer surplus and how to perform its calculation.
- Identify the implications of economic incidents such as sales or price alterations on existing and potential customers differently.
Verified Answer
SG
sanya gurungMay 27, 2024
Final Answer :
B
Explanation :
The opportunity cost of going to the game is the net benefit you forgo by not attending the Willie Nelson concert, which is $50 (your willingness to pay) minus $40 (the ticket cost), equaling $10. Therefore, you must value seeing the Cubs play the White Sox at least $10 to prefer it over the concert.
Learning Objectives
- Acquire an understanding of the principle of consumer surplus and how to perform its calculation.
- Identify the implications of economic incidents such as sales or price alterations on existing and potential customers differently.