what is the opportunity cost?
answer the 2 questions
1) By taking an airplane one can go from D to H in one hour, The same trip takes five hours by bus. If the airfare is $30 and the bus fare $10, which would be the cheaper mode of transportation for someone who could earn $2 per hour during that time? For someone who could earn $10 an hour?
2) On December 21, 2002, the Toronto Blue Jays decided not to offer salary arbitration to outfielder Jose Cruz, one of their more popular players. Arbitration was estimated to have settled on $5 million per season for Cruz. By not offering arbitration, Cruz became a free agent and could sign a contract with any of the other 29 teams in major leauge baseball. Under the rules of arbitration, any team signing Cruz would not have to give the Blue Jays any players, money, or draft picks in return. Did the Toronto Blue Jays truly get nothing in return?
here’s the bouns
Use the concept of opportunity cost to explain why the rate of divorce among celebraties is so high
Fly cost person 1 – $32 – $30 ticket plus $2 for time
Bus cost person 1 – $20 – $10 ticket plus $10 time
Fly cost person 2 – $40 – $30 ticket plus $10 time
Bus cost person 2 – $60 – $10 ticket plus $50 time
Based on their opportunity cost due to time, Person 1 is likely to take the bus and person 2 will likely fly
Baseball – They freed up $5 million per season that allows for the opportunity cost of acquiring some other teams free agents, pay other existing players more to retain them, or whatever else they decide is the best opportunity with their $5mil.