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What is your opportunity cost of going to Florida in the following...

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jose213 | Student, College Freshman | (Level 3) eNoter

Posted September 5, 2012 at 5:18 AM via web

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What is your opportunity cost of going to Florida in the following scenario?

 (Opportunity Cost) You can either spend Spring Break working at home for $80 per day for five days or go to Florida for the week. If you stay home, your expenses will total about $100. If you go to Florida, the airfare, hotel, food and miscellaneous expenses will total about $700.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted September 5, 2012 at 1:53 PM (Answer #1)

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If you stayed home from Spring Break, you would have gotten $400 from working.  However, you would have incurred expenses of $100 so your net income would have been $300.  If you go to Florida, all of your costs add up to $700.  This means that there is a $1000 difference to your finances between going to Florida and staying.

Your opportunity cost for going to Florida, then, is $1000.  You can also say that the opportunity cost is whatever you would have done with the $1000 if you had not used it going to Florida.

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