I've put £0 on the grounds that you've not actually purchased a ticket for the Dylan concert yet so you are not giving up anything of financial value that you actually have at this point in time. That is I'm working on a purely monetary assessment of `cost'.
I was going to vote this too, but then reasoned that if the 'opportunity cost' was the cost of giving up going to see Dylan then the Dylan ticket price was that cost even though I'd got the Clapton ticket for free and thus I was surely actually saving money beyond what it cost to get to the gig.*
However, I've never been anywhere near an economics course and get headaches near that kind of maths.
*I'm presuming that there is an inbuilt but unstated assumption that I am a muzo who will always got to a gig if there is one rather than stay at home reading LJ
I can see several ways to reason, but if you start factoring stuff you don't have yet but might at some point have then you also, presumably have to factor in the outlay
( ... )
Also, if you already had the Dylan ticket then I would make the opportunity cost £40, not £50 which would suggest I wouldn't be factoring in the "enjoyment value" of the Dylan concert, just the financial value of the ticket.
That rather argues against counting the enjoyment value before the ticket has been purchased.
I also suspect that the money someone thinks they would be prepared to pay for something and the money they would actually pay should the circumstance arise don't correlate as well as we might like.
Your mistake is in thinking in terms of "a purely monetary assessment".
It's a common misconception that economics is all about money. In fact, money is a small subject in economics. I'll probably do a post on that at some point.
In so far as philmophlegm gave a definition of Opportunity Cost, he said it was the value of everything you must give up to engage in an activity.
In this case you give up the opportunity to go to the Dylan concert. I suspect I may have a different emphasis here since in my line of work we're quite interested in the difference between wanting to do something and actually committing to doing it and I may have placed more importance on that than he intended.
Presumably if the ticket had actually been purchased then the Opportunity Cost would have been £50.
Well let's think this through if you had actually purchased the Dylan ticket for £40. You can't get a refund if you don't go. What is the opportunity cost now of going to see Eric Clapton?
Well, you lose out on that Dylan concert that we have previously established that you valued at £50. Because you cannot get a refund on the £40 Dylan ticket you have bought if you don't go to see Dylan, going to see the Clapton concert no longer saves you that £40 that it did in the original question (when you still had to buy the Dyland ticket).
So that would mean that the opportunity cost would then be - as you correctly calculated - £50.
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However, I've never been anywhere near an economics course and get headaches near that kind of maths.
*I'm presuming that there is an inbuilt but unstated assumption that I am a muzo who will always got to a gig if there is one rather than stay at home reading LJ
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That rather argues against counting the enjoyment value before the ticket has been purchased.
I also suspect that the money someone thinks they would be prepared to pay for something and the money they would actually pay should the circumstance arise don't correlate as well as we might like.
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In fact I would have said that the "cost" was actually -£40, because that's the amount you didn't spend by making the decision you did.
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It's a common misconception that economics is all about money. In fact, money is a small subject in economics. I'll probably do a post on that at some point.
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I don't like setting a value on something I "might do but haven't committed to yet", that doesn't feel like something I'm giving up.
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How you actually decide the value is another matter, of course :-)
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In this case you give up the opportunity to go to the Dylan concert. I suspect I may have a different emphasis here since in my line of work we're quite interested in the difference between wanting to do something and actually committing to doing it and I may have placed more importance on that than he intended.
Presumably if the ticket had actually been purchased then the Opportunity Cost would have been £50.
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Well, you lose out on that Dylan concert that we have previously established that you valued at £50. Because you cannot get a refund on the £40 Dylan ticket you have bought if you don't go to see Dylan, going to see the Clapton concert no longer saves you that £40 that it did in the original question (when you still had to buy the Dyland ticket).
So that would mean that the opportunity cost would then be - as you correctly calculated - £50.
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