What is the opportunity cost in this scenario? harry has been very busy at work for the past two weeks. he has been working weekends too. finally, he is going to get a weekend off. originally, he planned to paint his apartment that weekend. he also considered going fishing for the weekend. but then his parents called and asked him to come for dinner because it has been a while since they have seen each other. later on, his friend theo informed him about a surprise birthday party for another friend. theo plans to reserve a room at a restaurant for the celebration, with the cost to reserve the room split between theo, harry, and three other friends. now harry is confused about what he should do over the weekend. he decides that, for him, the most important commitments are going over to his parent's house and attending his friend's birthday party. in the end, harry decides to see his parents.
Originally he planned to paint his apartment
Explanation: The loss of other alternatives when one alternative is chosen is what we call opportunity cost. opportunity cost Is when an option is chosen from alternatives, the opportunity cost is the "cost" incurred by not enjoying the benefit associated with the best alternative choice. In a simple term, Opportunity cost is an economics term that refers to the value of what you have to give up in order to choose something else.
An opportunity cost is defined as the loss of a potential gain from going with another alternative. The opportunity costs in this situation are everything that Harry gave up, to see his parents. Although he gained the dinner with his parents that ha hadn't seen in awhile, he gave up a lot of other options on how he spent his weekend.
Correct: Later on, his friend Theo informed him about a surprise birthday party for another friend.
Harry's opportunity cost for going to his parents is not going to his friend's birthday party.
Harry has got a weekend off. He can use that weekend to paint his apartment or go fishing. He can also visit his parents for dinner. Or he can go to his friend's birthday party.
With so many options Harry is confused, about what he should do. The most important commitments for him are going over to his parent's house and attending his friend's birthday party.
If he chooses to visit his parents, the opportunity cost is not going to the party.
The opportunity cost of a decision is the cost of sacrificing the second-best alternative. The second-best alternative in this decision is attending the birthday party. So it will be considered the opportunity cost.
In this case there is an Implicit Cost: This is an opportunity cost that DOES NOT involve a money payment or market transaction. The oportunity costs for going to his paterns house areThe celebration of the surprise party with his friends.To paint his appartment.Going fishing.
maybe 20 dollars for gas money to get to his parents
The opportunity cost in this scenario is the three lost opportunities Harry experiences by deciding to go to his parents house. The term opportunity cost refers to the loss of potential gain from other alternatives when one alternative is chosen. The potential gain Harry may have lost by choosing to go to his parents for dinner instead could be relaxation while fishing, His house painting being finished, and time spent with his friends at the birthday party. These all can be considers lost opportunity due to choosing an alternate opportunity, that being dinner at his parents.
the Opportunity Cost is Harry's commitment of going over his parent's house
Opportunity cost arises here due to Harry's busy schedule and his need to choose between many desirables.
But the most preferred and desirable thing for Harry to do at the weekend is to see his parents so he choose to go to his parent's house over all other plans which are made before.