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 movies. Identify the relevant opportunity costs for you and your friend for the concert tickets that you purchased. Explain briefly.

Short answer

The opportunity cost for you is downloading movies and the opportunity cost for your friend is a meal at a restaurant.

Step-by-step solution

Step 1. Opportunity cost.

Opportunity cost is the cost foregone for the alternative choices to satisfy wants.

Step 2. The opportunity cost for each person.

The opportunity cost for you is downloading movies and the opportunity cost for your friend is a meal at a restaurant because these are the opportunities that they will miss for purchasing the concert ticket.