Case 1.

1: The Hong Kong Hilton

Case 1.1 : The answer

Why was it profitable to demolish a profitable Hong

Kong hotel?

The hotel was profitable.

It was expected to be profitable in the future.

Breaking the management contract was costly.

CHAPTER 1: Avoid Pitfalls! Case 1.2 : How much does it cost to go to

Penn?

Opportunity Cost = value of the best foregone Tuition and fees: 42,098
alternative to any decision Undergraduate expense budget

All actions imply an opportunity costs

Opportunity costs = true economic costs

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Case 1.2 : Is this the true cost? Logistics:

All actions ⇒ opportunity costs https://courseweb.library.upenn.edu/

Rebecca Stein

rstein2@econ.upenn.edu

541 McNeil, Thursdays, 1:00 to 3pm.

Case 1.3: MBA enrollment and economic

Case 1.4: Having kids
cycles

What effect will the current recession How much does it cost to raise a child?
have on MBA applications &
enrollment?

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Case 1.4 : A few facts
2009 estimate: annual child-rearing expense estimates
ranged between $11,650 and 13,530 for a child in a
two-child, married-couple family in the middle income
group.
USDA estimates on Child Rearing
Case 1.4 : Is this the true cost?
All actions ⇒ opportunity costs
Opportunity cost must include opportunity cost of time
for parents.
Estimate of time cost of first year: $23,780.
Time is the most important component of the true cost!