Carmen bought a $100 ticket to attend the Outside Lands Music & Arts Festival in
ID: 1148462 • Letter: C
Question
Carmen bought a $100 ticket to attend the Outside Lands Music & Arts Festival in San Francisco. Because it stars several of her favorite rock groups, she would have been willing to pay up to $200 to attend the festival. However, her friend Bessie invites Carmen to go with her to Monterey Bay Aquarium on the same day. That trip would cost $25, but she would be willing to pay up to $100. What is her economic cost (total opportunity cost) of going to the festival? Carmen's total opportunity cost of attending the Outside Lands Music & Arts Festival is $ (Enter a numeric response using an integer)Explanation / Answer
The opportunity cost of attending the music festival is $100-$25 = $75.
The implicit (opportunity) cost is $100 and explicit (monetary) cost is $25, therefore, economic surplus is $100-$25=$75.