Answer to Question #67432 in Macroeconomics for Umair

Question

The Economy Tomorrow section provides estimates of time spent in traffic delays. If the average worker produces $90 of output per hour, what is the opportunity cost of
a) Current traffic delays?
b) Estimated delays in 10 years?

Answer 1

Opportunity cost is the value of alternative opportunity, which is given up in favor of anything.
Therefore, if a worker spends 1 hour a day in traffic delays, the opportunity cost is $90.
Assuming that a worker works 250 days per year, opportunity cost in 10 years is:
1 x 250 x 10 x 90 = $225,000