ECO100Y1 Lecture : notes till here
Document Summary
Your next best alternative is to go to a restaurant, which you value at 150$ and which costs 100$. Answer: 200 + (150 100) = 250. Answer: not at all since the opportunity cost does not depend on the value to you of the action taken. Undertake activity if the marginal (additional) benefit exceeds marginal (additional) cost. Sunk costs fixed costs costs which are incurred whether or not the action is taken. Insight only relevant costs are those which can be avoided if action is not taken. Lease payment: per month - per day. Waiters (2): 6 hours at 10$ = 90$ Conclusion: - = profitable to stay open, fixed (sunk) cost is not relevant. Ticket price: 50: jack buys one week in advance, jill plans to buy on the day of the event. Subway breaks down on the day of the event, jack and jill both face unexpected cost: 75$ for taxis.
