Question
1. Erin lives in a college town, paying $6,600 a year for her apartment. She is calculating her opportunity cost of getting a BBA degree
1. Erin lives in a college town, paying $6,600 a year for her apartment. She is calculating her opportunity cost of getting a BBA degree from the local college. If she goes to college, she'll pay $8,900 for tuition and $1,400 for textbooks each year. She'd continue to live in the same apartment and pay the same rent. The rest of her expenses would also be the same no matter whether or not she goes to college. Erin is offered a job paying $20,000 per year, which she won't be able to do if she is in college. She expects to graduate in four years. What is Erin's opportunity cost of getting her BBA degree?
2.Honda decided to develop a new hybrid car. The project costs 55 billion yen. The managers expected that the new car would bring an additional revenue of 68 billion yen. Honda has already invested 24 billion yen when they suddenly find out that the introduction of a similar car by Toyota is expected to reduce Honda's revenue from its new car to 28 billion yen. In this situation, you'd advise Toyota to
A. discontinue the project because the total amount of investment it requires is greater than the expected revenue from the new car
B. discontinue the project because the company's additional revenue would be less than its sunk cost
C. finish the project to get the worth of the money invested in it
D. finish the project because the cost of completing it is lower than the expected revenue from the new car
E. Discontinue the project because the cost of completing it would be greater than the expected revenue from the new car
3. Brian gives private piano lessons. He charges $45 per hour for his lessons and can get as many customers as he wants. His only significant cost is the opportunity cost of his time. The table below shows the costs of each additional hour of Brian's time during a day. How many hours per day should Brian devote to giving piano lessons?
A. 2
B. 3
C. 4
D. 5
E. 6
Hour | Cost ($) |
First | 20 |
Second | 28 |
Third | 36 |
Fourth | 44 |
Fifth | 52 |
Sixth | 60 |
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