calculate opportunity cost = R10 000 fine; three-match suspension; match fee R25 000; RR 50 000 per match; R5 000 insurance pe month

Question

Please help:

 

calculate opportunity cost = R10 000 fine; three-match suspension; match fee R25 000; RR 50 000 per match; R5 000 insurance pe month

Answer 1

The following assumptions are made for (1) and (2):

• Insurance is paid whether or not the player participates in a match.
• The player pays a fee to participate in a match.
• The player receives a wage for actually playing each match.
• Suspensions and fines are not covered by insurance.

(1) Assume suspensions all in one month.

Unused matches fees: 3*25000=R75000 (assume R25000 outlay for participating)

Lost match opportunity: 3*50000=R150000 (assume R50000 for actually playing)

Fine: R10000;

Insurance cost: R5000 (1 month)

Net loss: 150000-75000+10000+5000=R90000 (opportunity cost)

(2) Assume suspension over 3 months (3 matches in 3 months).

Additional insurance=2*5000=R10000; net opportunity cost=90000+10000=R100000.