Oxcam College has been asked to host a professional rugby game on the campus playing field. The athletic director must estimate the opportunity cost of holding the event at the university. The only other sporting event scheduled for the university that evening is a fencing match that would not have generated any additional costs or revenues. The fencing match can be held at the local high school, but the rental cost of the school gymnasium would be £200. The athletic director estimates that the professional rugby game will require 20 hours of labor to prepare the field. Clean-up depends on the number of spectators. The athletic director estimates the time of cleanup to be equal to two minutes per spectator. The labor would be hired especially for the rugby game and would cost £8 per hour. Utilities will be £500 greater if the rugby game is held at the playing field. The professional rugby team would cover all other costs.

a. What is the variable cost of having one more spectator?

b. What is the opportunity cost of allowing the professional rugby team to use the playing field if 10,000 spectators are expected?

c. What is the opportunity cost of allowing the professional rugby team to use the playing field if 12,000 spectators are expected?