Question

A) What are opportunity costs and how can they be used to make good choices?

B) Pretend that you are a good bass player and the Rolling Stones ask you to leave school, work, etc. and join them on tour for the next four months. What will the opportunity costs be of joining the Rolling Stones on tour?

C) What will the opportunity costs be of not joining them on tour?

Answer 1

Answer for A)

When we have a number of choices to made for given alternatives and then we choose one of them that is when we choose the alternative we forgo other available alternatives then opportunity cost is the value of most valuable alternative out of forgine alternatives.

The concept of Opportunity cost can help in deciding the best alternative in terms of variables we are interested in for given point and state of time.We can assume opportunity cost is a mapping function that provides a value on real number scale that makes life of rational consumer easy as now we can choose the alternative which have highest opportunity cost if ti we had forgone it.

Answer for B)

Opportunity Cost of Joining Rolling stones is to forgo school education for that period or wages i would have earned being employed somewhere in that period.( Missing School can have implicit impact on wages to be earned in future as if career as Bass player turns to be unsuccessful)

Answer C)

Opportunity cost of not joining them on tour is to give up the future career as Bass player and goodwill lost as not being the part of Rolling stones.