Fuckin' Nerd

QQ: opportunity costs

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dihard:

An opportunity cost is what you sacrifice by choosing one option or pursuing one endeavor over another. It’s one of the most basic principles of economics and here’s a little quiz from a book I’m reading, The Economic Naturalist, that tests your knowledge. (Explanation to come..)

Suppose you’ve won a free ticket to see an Eric Clapton concert tonight and you can’t resell it. You have no set plans tonight, but were considering attending a Bob Dylan concert. A ticket for tonight’s Dylan concert costs $40, but on any given day you would be willing to spend $50 to see him perform (that is, if the Dylan ticket costs more than $50, you’d pass up the concert). There is no other cost associated with seeing either performer. What’s your opportunity cost of attending the Clapton concert?

Choices: a. $0, b. $10, c. $40, d. $50

Note: Only 21.6% of professional economists (200 surveyed in 2005) chose the right answer.

I think it’s B.  Eric Clapton is worth $0.  Bob Dylan is worth $50 to you, but you have to spend $40.  Meaning you get $10 in value from seeing Bob Dylan but $0 value from Clapton.  However, I’d think there’d be some value to the Clapton concert…. I love Clapton :(

Reblogged from What I Learned Today.