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Suppose that Juanita is deciding whether or not to buy a pair of sandals that she has been researching online, and also the best place

Suppose that Juanita is deciding whether or not to buy a pair of sandals that she has been researching online, and also the best place to make her purchase. Three different stores in the area sell the sandals she likes, but some stores are more convenient for Juanita 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 $113 for the sandals:

Store Travel Time Each Way Price of a Sandals
(Minutes) (Dollars per sandals)
Local Shoe Store 15 113
Different Neighborhood in Town 30 95
Rural Outlet 60 74

Juanita earns an hourly wage of $16 at her job. In order to purchase her sandals she will have to take time off work, so each hour away from her job costs her $16 in lost income. Assume that Juanita'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 Juanita incurs no additional costs other than the sandals, such as gas.

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 Sandals Total Cost
(Dollars) (Dollars per sandals) (Dollars)
Local Shoe Store 113
Different Neighborhood in Town 95
Rural Outlet 74

Assume that Juanita considers both her opportunity costs and the price of sandals when making her shopping decision. Juanita will minimize her cost of buying the sandals if she shops at the .

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