Economics and Opportunity Cost Essay
Mankiw's Ten Principles of Economics
Opportunity cost is the value of the next best alternative in a decision. Imagine that you have $150 to see a concert. You can either see "Hot Stuff" or you can see "Good Times Band." Assume that you value Hot Stuff's concert at $225 and Good Times' concert at $150. Both concerts cost $150 per ticket, but it would take you a couple of hours to drive to Hot Stuff's concert and you have to be in school (the next) morning for an exam. Good Times' concert is right here in town. Explain how you would assess the opportunity cost of seeing Good Times in concert. What is the opportunity cost of going to Good Times' concert?
Develop a response that includes examples and evidence to …show more content…
By comparing costs and benefits, I will be able to make a rational decision. My behavior changed when I realized my actions could possibly affect my GRE score and admissions into a prestigious program. In all, my decision to choose the next best alternative to stay home to rest and study will be driven by the marginal benefit exceeding the marginal cost [Principle of Microeconomics. 2012. 7]. The benefit of staying home to better prepare myself for my exam was much higher than spending a few hours at a concert and spending money – as I should be saving for graduate school.
The next best alternative to both those possible actions will be to stay home. The intangible