Susan Ortiz operates a covered parking structure that can accommodate up to 600 cars. Susan charges...

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Susan Ortiz operates a covered parking structure that can accommodate up to 600 cars. Susan charges $6 per hour for parking. Parking attendants cost $12 per hour each to staff the cashier’s booth at Susan’s Parking. The facility has two parking attendants who each work eight hours per day. Utilities and other fixed costs average $4,000 per month. Recently, the manager of a nearby Sheraton Hotel approached Susan concerning the reservation of 100 spots over an upcoming weekend for a lump sum of $3,600. This particular weekend will be a football weekend, and the structure would be full for only the six hours surrounding the game. Other than those six hours, the structure would have more than 100 empty spots available. The facility would have the same number of parking attendants whether or not Susan takes the offer from the Sheraton Hotel. What is the opportunity cost of accepting the offer?

David · Accepted Answer

On football weekends, the opportunity cost is: 
                                                                      
                                                        100 spots for cars X 6 hours X $6.00 = $3,600. 
  
              In the short run,

Susan Ortiz operates a covered parking structure that can accommodate up to 600 cars. Susan charges $6 per hour for parking. Parking attendants cost $12 per hour each to staff the cashier’s booth at...

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