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Title: You have 40,000 frequent flier miles. You could exchange your miles for a round trip ticket to ... Post by: tuggy on May 22, 2017 You have 40,000 frequent flier miles. You could exchange your miles for a round trip ticket to Bermuda over spring break. Does that mean your flight to Bermuda would be free? Explain your reasoning.
Title: Re: You have 40,000 frequent flier miles. You could exchange your miles for a round trip ticket to ... Post by: padre on May 22, 2017 Answer:
It does not. You could use your miles for other travel and so there is an opportunity cost if you use your miles to fly to Bermuda. Suppose, for example, you are definitely going to fly to Chicago when the spring semester is over. You could use your 40,000 miles to fly to Chicago or you could purchase a ticket for $300. In this case, the opportunity cost of using your miles to fly to Bermuda is the $300 you will have to spend for the airfare to Chicago. |