Question

If you receive a free ticket to a​ concert, what, if​ anything, is your opportunity cost of attending the​ concert?
a. the pleasure yielded by the concert cancels any costs.​ thus, there is no cost of any type.
b. since the ticket was a​ gift, there is no opportunity cost.
c. the next best activity that​ can't be done while attending the concert.
d. the concept of opportunity cost does not apply to intangibles like concerts.

Answer 1

Correct answer is "C". An opportunity cost is the the loss of the next best alternative when one alternative is chose. If two choices are mutually exclusive (you can have one but not the other), then choosing one means the loss of the other activity is the opportunity cost. Opportunity cost is not merely the money or financial cost difference between two options (choice b) but also covers the lost time (option d) or pleasure (option a) as another option may provide more of either (therefore having increased utility).