Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

. Determining opportunity cost Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry

. Determining opportunity cost

Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $103 for the skirt:

Store Travel Time Each Way Price of a Skirt
(Minutes) (Dollars per skirt)
Local Department Store 15 103
Across Town 30 85
Neighboring City 60 63

Juanita makes $16 an hour at work. She has to take time off work to purchase her skirt, so each hour away from work costs her $16 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling.

Complete the following table by computing the opportunity cost of Juanita's time and the total cost of shopping at each location.

Store Opportunity Cost of Time Price of a Skirt Total Cost
(Dollars) (Dollars per skirt) (Dollars)
Local Department Store 103
Across Town 85
Neighboring City 63

Assume that Juanita takes opportunity costs and the price of the skirt into consideration when she shops. Juanita will minimize the cost of the skirt if she buys it from the .

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics Principles, Problems, & Policies

Authors: Campbell McConnell, Stanley Brue, Sean Flynn

20th Edition

0077660773, 9780077660772

More Books

Students also viewed these Economics questions

Question

Name the five structural isomers of C6H14

Answered: 1 week ago