Suppose Greyhound charges $102 for a one way trip from Washington DC to Chicago, IL. An individual
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a. What is the cash flow to Greyhound from issuing the ticket to the individual at $40?
b. What is the opportunity cost to the Greyhound bus service of allowing the individual to travel? That is, what is the cash flow associated with denying the request to travel for $40?
c. Is there any longer-term consideration that Greyhound must take into account in permitting such travelers? Should company policies accommodate such instances?
Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...
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Related Book For
Managerial Accounting
ISBN: 978-1118385388
2nd edition
Authors: Ramji Balakrishnan, Konduru Sivaramakrishnan, Geoff B. Sprinkle
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