1. Jane, Dan and Melodie are planning to travel from Toronto to Calgary. The trip takes one hour by air and five hours by train. The airfare is $100 and the train fare is $60. They all have to take time off work when travelling (travel only occurs during the work day). Jane earns $5/hour in her job, Dan earns $10/hour in his job and Melodie earns $12/h. Each option has no benefit since then only benefit is to get to Calgary. There are costs however with each decision. a) Calculate the opportunity cost of air and train travel for Jane. Benefits - Arrive in Calgary Ex. (The first one is already done for you) Opportunity Cost of Air for Jane = (Benefits from train) + (Cost of Air) =0 + ($100) = $100 Opportunity Cost of Train for Jane = (Benefits from Air) + (Cost of Train) =0+ ($60 + $5 X4) =$80 b) Calculate the opportunity cost of air and train travel for Dan. Opportunity Cost of Air for Dan = 100 Opp Cost of Train = of ( 60 + 4 hrsix (0 ) - 100 c) Calculate the opportunity cost of air and train travel for Melodie. Opp Cost of Air for Melodie = 0+ $100 = 100 Opp Cost of Train for M = 0+ ( 12 x 4 + 60 ) = 108 d) Given each individual's opportunity cost for traveling by train and by airplane, which choice is most efficient for each person to optimize their money?2. Rae is a baby sitter who was recently offered two job contracts for this Saturday night. Mrs. Robinson has asked Rae to babysit her 6-year old daughter named Dottie while Mr. Clark has asked Rae to babysit his 1-year old son named Charlie. Since they both would need her at 8:00 pm, she could not accept both requests. Rae's best friend Sam has also asked Rae if she would like to watch the school's basketball game that is scheduled at 8:00 pm at the school gym on Saturday as well. With the choice of 2 babysitting job offers and the request to see the basketball game, Rae constructs a chart listing the Benefits and Costs associated with each option. Babysit Dottie Babysit Charlie Watch the Basketball Game Benefits Salary of $100 Salary of $90 Gets to spend Access to streaming Charlie sleeps a lot time with her the new Marvel Movie and is very well- friend Sam. on Disney Plus behaved. Rae will have a peaceful time to get some alone time for mental health benefits. Costs Dottie causes a lot of Rae will need to Will eat pizza mess and throws spend $5 to take for $15 while at food. the bus to Mr. the game. Rae's new blouse is Clark's house. Needs to take most likely going to Ordering pizza will the bus to the get ruined by Dottie. cost only $15 since school for $5. Ordering pizza will Charlie already has cost $25 since she his own food would need to share prepared. with Dottie. Rae's preferences are Babysit Charlie, Babysit Dottie and then go to the basketball game. a) Assume that Rae chooses to babysit Charlie instead of choosing to babysit Dottie. Determine the opportunity cost of this decision. Make sure to list out the components of the opportunity costs and identify any monetary values. Then simplify your response. Be careful not to include "duplicate expenses" as we had mentioned in class. (2 marks)
