You plan to go skiing next weekend. If you do, you’ll have to miss your usual weekend job that pays $100. You won’t be able to study for 8 hours and you won’t be able to use your prepaid college meal plan. The cost of your travel and accommodations will be $350, the cost of renting skis is $60, and your food will cost $40. What is the opportunity cost of the weekend ski trip?
Lost income from the job, lost study time and meals plus money that cannot be spent on other items. Those are the ones I see immdiately, there could be others.
To calculate the opportunity cost of the weekend ski trip, you need to consider the value of everything you would be giving up by choosing to go skiing instead.
In this scenario, the opportunity cost can be broken down into several components:
1. Lost income from your weekend job: Since you'll have to miss your job, you would lose $100 in wages.
2. Lost study time: If you usually spend 8 hours studying over the weekend, you would have to give that up. Assigning a value to this can be subjective, but for simplicity, let's assume you value your study time at $15 per hour. So the opportunity cost of lost study time would be 8 hours multiplied by $15, which equals $120.
3. Prepaid college meal plan: Since you won't be able to use your prepaid college meal plan, you will need to spend money on food. The cost of food for the weekend is given as $40.
4. Money that cannot be spent on other items: This refers to the expenses directly associated with the ski trip, such as travel and accommodations ($350) and the cost of renting skis ($60). These expenses would not be available to spend on other things.
So, to calculate the opportunity cost of the weekend ski trip, you would add up these components:
Opportunity Cost = Lost income + Lost study time + Food cost + Ski trip expenses
= $100 + $120 + $40 + $350 + $60
= $670
Therefore, the opportunity cost of the weekend ski trip is $670.