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Opportunity Cost Analysis

Opportunity Cost Analysis        
Cliff Lawrence owns CL Skating, an ice-skating rink that accommodates 200 people. Cliff charges $10 per hour to skate. The cost of attendants to staff CL Skating is $100 per day. Utilities and other fixed costs average $2,000 per month.
Recently, the manager of an out-of-town hockey team approached Cliff concerning renting the rink for a full day of practice on an upcoming Sunday for the lump sum of $1,000. Attendants would not be needed. CL's normal operating hours on Sunday are 10am to 7pm, and the average attendance is 10 skaters per hour.
(a)   What is the opportunity cost of accepting the offer? Explain your reasoning.
(b)   Should Cliff accept the offer? Why or why not?
(c) Are there any non-financial circumstances Cliff should consider if he accepts this offer? Explain.

Feb 10 2020 View more View Less

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