Answer in Microeconomics for Cecil Myers #174869
Here is the question: Having spent the equivalent of a thousand dollars or so on the airline tickets, hotel room, and concert tickets, should the couple actually go to the Red Hot Chili Pipers concert? Use sound economic reasoning to explain your answer. In particular, identify the concept that is the basis for your answer; explain that concept in general; and then apply that concept to this particular situation.
The couple should not go to the concert. This is because the opportunity cost allows them to spend scarce resources on one alternative over the other. Opportunity cost is the forgone benefits by choosing one alternative over another. The opportunity cost increases as the resources are applied and money spend cannot be used for the alternative plan. To properly evaluate the opportunity cost, the cost and benefits of the options are weighed against the other. Here the opportunity cost is the pleasures obtained from the Red Hot Chili Pipers .