What is the opportunity cost in this scenario?…

History Questions
Short Answer
Step by Step Solution
History Questions

What is the opportunity cost in this scenario? Harry has been very busy at work for the past two weeks. He has been working weekends too. Finally, he is going to get a weekend off. {{Originally, he planned to paint his apartment that weekend.}} He also considered going fishing for the weekend. {{But then his parents called and asked him to come for dinner}} because it has been a while since they have seen each other. {{Later on, his friend Theo informed him about a surprise birthday party for another friend.}} Theo plans to reserve a room at a restaurant for the celebration, with the cost to reserve the room split between Theo, Harry, and three other friends. Now Harry is confused about what he should do over the weekend. He decides that, for him, the most important commitments are going over to his parent’s house and attending his friend’s birthday party. In the end, Harry decides to see his parents.

Short Answer

The concept of opportunity cost involves understanding what is sacrificed when making a decision. In Harry’s case, he has several weekend options, and by choosing to visit his parents, the opportunity cost will be the highest valued activity he gives up, such as attending a party or completing a painting project.

Step-by-Step Solution

Step 1: Understand Opportunity Cost

Opportunity cost refers to the value of the next best alternative that is forgone when making a decision. In simpler terms, it’s what you sacrifice when you choose one option over another. Recognizing opportunity cost is crucial in economic decision-making as it helps to evaluate the true cost of a choice.

Step 2: Identify Harry’s Options

Harry has several activities to choose from for his weekend plans. The options he is considering include:

  • Attending a surprise birthday party at a restaurant
  • Painting his apartment
  • Going fishing
  • Visiting his parents

Each of these activities holds different values for Harry, depending on his personal preferences and priorities.

Step 3: Determine the Highest Valued Activity Given Up

Once Harry decides to visit his parents, he must determine which activity he is sacrificing for that decision. The opportunity cost is the highest valued option he gives up, which could be:

  • The enjoyment of attending the birthday party with friends
  • The satisfaction of completing his painting project
  • The relaxation of going fishing

Ultimately, identifying the highest valued activity helps Harry understand what he misses out on when making his choice.

Related Concepts

Opportunity Cost

The value of the next best alternative that is forgone when making a decision

Options

The various choices available to an individual when making a decision

Highest Valued Activity

The most desirable option that is sacrificed when a specific choice is made.

Table Of Contents
  1. What is the opportunity cost in this scenario? Harry has been very busy at work for the past two weeks. He has been working weekends too. Finally, he is going to get a weekend off. {{Originally, he planned to paint his apartment that weekend.}} He also considered going fishing for the weekend. {{But then his parents called and asked him to come for dinner}} because it has been a while since they have seen each other. {{Later on, his friend Theo informed him about a surprise birthday party for another friend.}} Theo plans to reserve a room at a restaurant for the celebration, with the cost to reserve the room split between Theo, Harry, and three other friends. Now Harry is confused about what he should do over the weekend. He decides that, for him, the most important commitments are going over to his parent's house and attending his friend's birthday party. In the end, Harry decides to see his parents.

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