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tuggy tuggy
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Posts: 864
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6 years ago
Your friend Charles asks you to drive him to the airport.  He says that he will reimburse you for the cost of going to the airport.  It is a two hour roundtrip to the airport and you will use $15 of gas.  If Charles pays for the cost of gas has he paid your full cost of taking him to the airport?  What other costs is Charles forgetting?
Textbook 
Microeconomics

Microeconomics


Edition: 1st
Authors:
Read 211 times
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#1
Educator
6 years ago
The opportunity cost of driving Charles to the airport includes the direct cost of $15 for gas for driving to the airport.  However, it also includes the depreciation in the value of the car used to drive to the airport (the car is now worth less with the additional miles) and the value of the best alternative use of the two hours you spent driving.  It might have been working a part-time job, studying, or exercising.  The opportunity cost of driving Charles to the airport is clearly more than the $15 in gas.
tuggy Author
wrote...
#2
6 years ago
Thanks for providing the correct answer
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