Opportunity costs – lost parking fees
I am a Treasurer on a local committee, whose task it is to bring a Christmas street market to my local town.
We raise sponsorship from local business and in turn the street market will boost Christmas trade it is hoped. Of course to do this, we need the approval of various local authorities, one being our county council. To hold the market, we need permission to close streets, and guess what, there is a small opportunity cost of doing this.
The street has about 15 parking spaces, which are chargeable at a rate of say €1.50 per hour from 08:00 to 18:00. The local council makes the assumption these spaces will be filled – which is probably quite fair – and the have to be paid for the parking revenue lost. This is a classic opportunity cost example, as they lose revenue by granting permission to hold the market, and thus are choosing one option over another. They probably could also add on lost revenues from tickets for illegal parking – I’d be quite sure there are more than one of these each day – but I will keep quiet on that one 🙂