Problem Set 6

Problem Set 6 - Problem Set#5 PA 410 Professor Yonghong Wu...

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Problem Set #5 PA 410 Professor Yonghong Wu Due on July 12th, at the START OF CLASS 1. Suppose that tickets to the university basketball games cost \$10 for students, and that you must wait in line one-half hour for tickets. Furthermore, you are able to sell the tickets afterwards for \$20 to non-students who prefer not to wait in line (but don’t tell anyone!). In addition, you have a part-time job that allows you to choose your own hours, and pays \$8/hour. a) What is the opportunity cost of buying a ticket? \$10 Profit – From Selling The Ticket - \$ 4 Opportunity Cost For Waiting In Line ½ hour. =\$ 6 Total Opportunity Cost b) Assuming you have already purchased a ticket, what is the opportunity cost of attending the game in person versus watching on television? +4 – Waiting In Line +10 – Ticket Price \$14 = Total Cost In Person +4 – Waiting In Line +20 – Selling The Ticket c) Suppose that the game is on a day in which you have a final exam scheduled. Knowing you can’t go, should you buy a ticket in order to resell it?

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Problem Set 6 - Problem Set#5 PA 410 Professor Yonghong Wu...

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