M4. Rani lives and works in downtown Toronto. She pays $500 a week in rent. Her job pays her $20 an hour. She can choose how many hours to work a week, but she has to be present in the office to do her job. She works in the same building that she lives so her commuting time is zero. a) If she does not rent her current apartment, she could rent an apartment in Guelph for $300 a week but will need to spend 3 hours a day (total) commuting to downtown Toronto, 5 days a week. Assume Rani values both apartments and living situations the same. What is Rani's Opportunity Cost of renting her current apartment in downtown Toronto? Explain your reasoning clearly and show all the steps in your working. b) Suppose Rani's wage decreases. Does this affect her decision to live in Toronto? Explain your reasoning clearly and show all the steps in your working. c) Suppose Rani's job moves online. She is no longer required to be present in the office to do her job. Does this affect her decision to live in Toronto? Explain your reasoning clearly and show all the steps in your working. d) Suppose Rani inherits an apartment in Guelph that is similar to the one she would rent if she lived in Guelph. Living in it costs her nothing. Does this affect her decision to live in Toronto? Explain your reasoning clearly and show all the steps in your working.
M4. Rani lives and works in downtown Toronto. She pays $500 a week in rent. Her job pays her $20 an hour. She can choose how many hours to work a week, but she has to be present in the office to do her job. She works in the same building that she lives so her commuting time is zero. a) If she does not rent her current apartment, she could rent an apartment in Guelph for $300 a week but will need to spend 3 hours a day (total) commuting to downtown Toronto, 5 days a week. Assume Rani values both apartments and living situations the same. What is Rani's Opportunity Cost of renting her current apartment in downtown Toronto? Explain your reasoning clearly and show all the steps in your working. b) Suppose Rani's wage decreases. Does this affect her decision to live in Toronto? Explain your reasoning clearly and show all the steps in your working. c) Suppose Rani's job moves online. She is no longer required to be present in the office to do her job. Does this affect her decision to live in Toronto? Explain your reasoning clearly and show all the steps in your working. d) Suppose Rani inherits an apartment in Guelph that is similar to the one she would rent if she lived in Guelph. Living in it costs her nothing. Does this affect her decision to live in Toronto? Explain your reasoning clearly and show all the steps in your working.
Chapter2: Scarcity And Opportunity Costs
Section: Chapter Questions
Problem 14E
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Economics Today and Tomorrow, Student Edition
Economics
ISBN:
9780078747663
Author:
McGraw-Hill
Publisher:
Glencoe/McGraw-Hill School Pub Co
Economics Today and Tomorrow, Student Edition
Economics
ISBN:
9780078747663
Author:
McGraw-Hill
Publisher:
Glencoe/McGraw-Hill School Pub Co