Opportunity Cost

As a senior student, you make economic choices daily.

HOW?

Imagine you want to watch a movie at the local movie theater.  

You first have to consider the price of Admission:

General (14-64) $11.75

Child (3-13) $8.99

Senior (65+) $8.99

OR whether you want to see the movie in 3D:

3D General (14-64) $14.75

3D Child (3-13) $11.99

3D Senior (65+) $11.99

However, seeing a movie also involves purchasing food and drink. 

   

As the consumer you have to consider: what size drink/popcorn you want, the quantity of each item, and if you want to also purchase other food items such as chocolate, candy, ice cream, hot dogs, fries, etc.

Here is a list of food/drink prices for a normal theatre 

(like CINEPLEX ODEON):

Pop

S-$4.50 M-$4.75 L-$5.00

Popcorn

S-$4.75 M-$5.25 L-$5.00

Chocolate Bar

$2.50

Ice Cream

S-$3.50 M-$3.75 L-$4.00

Candy

$3.50

Hot Dog

$6.50

Fries

S-$5.00 M-$6.00 L-$6.25 

Imagine you only have a budget of $30.00.  How will you spend your money?

This is the dilemma of opportunity cost.

Opportunity cost refers to the alternative(s) that is/are sacrificed when (a) choice(s) is/are made.  Other examples of opportunity cost involved with this scenario include: if you only have a certain amount of time to watch a movie, or if you have an economics test tomorrow but choose to see a late night movie instead.

Therefore, if you have a scarcity of time, money, etc. at a movie theater, you have to make choices based upon that scarcity.  Should I choose to watch a movie another night when I do not have to study for a test?  Should I buy the chocolate bar instead of the candy?  Should I purchase a Small pop/popcorn instead of a Large?

Each choice will provide

a low opportunity cost: the choice(s) made incur(s) a high benefit

AND/OR

a high opportunity cost: the choice(s) made incur(s) a low benefit 

to determine the best decision.