Answer to Question #263045 in Microeconomics for meee

Question

A city has built a new high-rise car park. There is always an available parking spot, but it costs a1 a day. Before the new high-rise car park was built, it usually took 15 minutes of cruising to find a parking space. Compare the opportunity cost of parking in the new car park with the old parking system. Which is less costly and by how much?

Answer 1

           The cost advantage that is foregone as an outcome of making one option over another is opportunity cost. The opportunity cost of parking in the renovated garage is $1, but the gains of parking in the garage include saving time that would otherwise be wasted hunting for a parking spot. The 15 minutes lost hunting for a parking place is the opportunity cost of not parking in the garage.

           The garage is less expensive because you will be assured a secure parking spot that will safeguard your car from other exterior risks for one dollar a day.