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| 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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