# Amy lives with her parents rent-free, spends \$210/week on other living expenses such as food and entertainment, and earns \$425/week from her job. Amy is planning to take an unpaid leave from her job to travel in Cambodia. She has already purchased a visa for Cambodia for \$55. She would pay \$370/week for accommodations and \$125/week for other living expenses in Cambodia and \$975 for a round-trip flight. What is Amy’s opportunity cost of traveling in Cambodia for 4 weeks? Explain or show how you arrived at your answer

Amy currently earns \$425 a week. Take her \$425 earnings and multiply by 4 (weeks) to get \$1,700.

What Amy spends at home on expenses and entertainment is irrelevant to what she will be spending on her trip, so it is factored out. Amy will lose a month of potential earnings of \$1,700 and will have different expenses abroad.

Her \$55 (visa one-time expense) + \$370 (accommodations) x 4 (weeks) = \$1,535.

Her \$125 (weekly living expenses) x 4 = \$500.

Her round-trip flight costs \$975.

Now take the \$1,700 (foregone earnings) + \$1,535 (visa plus accommodations) + \$500 (four weeks living expenses) + \$975 (flight) = \$4,710.

Therefore, the opportunity cost of Amy's trip is her total lost earnings of \$1,700 plus the \$3,010 total cost of the trip, for a total opportunity cost of \$4,710.

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