2. Determining opportunity costJuanita is deciding whether to buy a suit that she wants, aswell as where to buy it. Three stores carry the same suit, butit is more convenient for Juanita to get to some stores thanothers. For example, she can go to her local store, located 15Discountedminutes away from where she works, and pay a marked-upMarked-uppricepriceprice of $102 for the suit:Juanita's officeOriginal priceTravel Time Each WayPrice of a Suit(Minutes)(Dollars per suit)StoreLocal Department Store15102Across Town3088Neighboring City6063Juanita makes $18 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $18 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 answerthe 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.Opportunity Cost of TimePrice of a SuitTotal Cost(Dollars)(Dollars per suit)(Dollars)StoreLocal Departmen102store in the neighboring cityAcross Town88Neighboring Citylocal department store63store across townAssume that Juanitaprice of the suit into consideration when she shops. Juanita will minimize the cost of the suit ifshe buys it from the

Answered: Juanita is deciding whether to buy a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. Determining opportunity cost
Juanita is deciding whether to buy a suit that she wants, as
well as where to buy it. Three stores carry the same suit, 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
Discounted
minutes away from where she works, and pay a marked-up
Marked-up
price
price
price of $102 for the suit:
Juanita's office
Original price
Travel Time Each Way
Price of a Suit
(Minutes)
(Dollars per suit)
Store
Local Department Store
15
102
Across Town
30
88
Neighboring City
60
63
Juanita makes $18 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $18 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.
Opportunity Cost of Time
Price of a Suit
Total Cost
(Dollars)
(Dollars per suit)
(Dollars)
Store
Local Departmen
102
store in the neighboring city
Across Town
88
Neighboring City
local department store
63
store across town
Assume that Juanita
price of the suit into consideration when she shops. Juanita will minimize the cost of the suit if
she buys it from the

Expert Solution

Step 1

The individual needs 15 minutes to travel from her office to the store in order to purchase the dress from the local departmental store. The total time required to travel is thus 30 minutes and the cost of the dress is $102. The hourly wage rate is $18 which means that the individual will lose $9 for traveling to purchase for taking 30 minutes off from the office.

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