Question 1

Travel Time Each Way Price of a Boots Store (Minutes) (Dollars per boots) Local Shoe Store 15 114 Different Neighborhood in Town 30 95 Rural Outlet 60 74 Ciana earns an hourly wage of $16 at herjob. In order to purchase her boots she will have to take time off work, so each hour away from her job costs her $16 in lost income. Assume that Ciana's travel time is the same each way (to and from the store) and that it will take her 30 minutes once she reaches a store to complete her shopping. Assume throughout the question that Ciana incurs no additional costs other than the boots, such as gas. Complete the following table by computing the opportunity cost of Ciana's time and the total cost of shopping at each location. Opportunity Cost of Time Price of a Boots Total Cost Store (Dollars) (Dollars per boots) (Dollars) Local Shoe Store 114 Different Neighborhood in Town 95 Rural Outlet 74 Assume that Ciana considers both her opportunity costs and the price of boots when making her shopping decision. Ciana will minimize her cost of buying the boots if she shops at the Y . Travel Time Each Way Price of a Boots Store (Minutes) (Dollars per boots) Local Shoe Store 15 114 Different Neighborhood in Town 30 95 Rural Outlet 60 74 Ciana earns an hourly wage of $16 at her job. In order to purchase her boots she will have to take time off work, so each hour away from her job costs her $16 in lost income. Assume that Ciana's travel time is the same each way (to and from the store) and that it will take her 30 minutes once she reaches a store to complete her shopping. Assume throughout the question that Ciana incurs no additional costs other than the boots, such as gas. Complete the following table by computing the opportunity cost of Ciana's time and the total cost of shopping at each location. Opportunity Cost of Time Price of a Boots Total Cost Store (Dollars) (Dollars per boots) (Dollars) Local Shoe Store Different Neighborhood in Tow store in the different neighborhood in town 5 Rural Outlet rural outlet 4 local shoe store Assume that Ciana considers both h -n making her shopping decision. Ciana will minimize her cost of buying the boots if she shops at the V . 2. Determining opportunity cost Suppose that Ciana is deciding whether or not to buy a pair of boots that she has been researching online, and also the best place to make her purchase. Three different stores in the area sell the boots she likes, but some stores are more convenient for Ciana to reach than others. One option is her local shoe store located only 15 minutes away from where she works, where they charge a marked-up price of $114 for the boots: 7. Changes in incentives Due to the brutal nature of American football, collegiate athletes run the risk of sustaining head injuries over the course of playing the game. High- speed collisions involving blows to the head are especially dangerous. Suppose the president of the National Collegiate Athletic Association (NCAA) imposes a new rule that requires college football players at all levels to wear a soft, protective covering over their helmet, designed to reduce the impact of hits to the head that occur when playing the sport. While the new protective coverings worn over helmets Y the probability of injury resulting from blows to the head, the additional safety measures could also incentivize football players to play more V , which could potentially V the amount of high-speed collisions and thus the number head injuries suffered by college players, all else equal. 5. Property rights and market failures Graphic designers are much V likely to supply art to the market if property rights are enforced. Public policy can improve economic efficiency in the presence of market failures. Complete the following table by classifying the source of market failure in each case. Market Market Failure Power Externality There is only one bike rental location servicing a large section of recreational trails, giving the company the ability to influence the price of bike rentals. A student using an e-cigarette in a library emits clouds of vapor that disrupt others working close to them