In the coming years the city of Nashville, TN will spend $2 billion on a new stadium for thier city's NFL team the Tennessee Titans. %0D%0A%0D%0AExplain why it is incorrect to say that the opportunity cost of that new stadium is the $2 billion. Provide two examples of what opportunity costs of the new stadium actually might be. Finally, evaluate the usefulness of the phrase "net value" or "net benefit" when analyzing opportunity costs. (6 points)
It is incorrect to say that the opportunity cost of the new stadium is the $2 billion because opportunity cost refers to the value of the next best alternative that is foregone when making a decision. In this case, the opportunity cost of building the stadium is not just the monetary value of $2 billion, but rather what could have been done with that money instead.
Two examples of opportunity costs of the new stadium could be:
1. Education and Infrastructure: The $2 billion could have been invested in improving the quality of education and infrastructure in the city. This would have provided long-term benefits to the community by enhancing human capital and attracting more economic opportunities.
2. Urban Revitalization: The money could have been used for urban revitalization projects, such as improving public transportation, developing affordable housing, or revitalizing neighborhoods. These initiatives could have had a positive impact on the overall well-being and livability of the city.
The phrase "net value" or "net benefit" is useful when analyzing opportunity costs as it considers the difference between the benefits gained and the costs incurred. It helps assess whether the chosen option is worth pursuing by weighing the advantages against the disadvantages. It allows decision-makers to evaluate if the benefits outweigh the opportunity costs associated with the decision.