Suppose that Ciana 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 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 $112 for the sandals: Store Local Shoe Store Different Neighborhood in Town Rural Outlet Travel Time Each Way (Minutes) 15 30 60 Marked-up price Store Local Shoe Store Different Neighborhood in Town Rural Outlet Juanita's office Price of a Sandals (Dollars per sandals) 112 98 86 Discounted price Original price Ciana earns an hourly wage of $42 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 $42 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 sandals, 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 (Dollars) Price of a Sandals (Dollars per sandals) 112 98 86 Total Cost (Dollars) Assume that Ciana considers both her opportunity costs and the price of sandals when making her shopping decision. Ciana will minimize her cost of buying the sandals if she shops at the
Suppose that Ciana 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 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 $112 for the sandals: Store Local Shoe Store Different Neighborhood in Town Rural Outlet Travel Time Each Way (Minutes) 15 30 60 Marked-up price Store Local Shoe Store Different Neighborhood in Town Rural Outlet Juanita's office Price of a Sandals (Dollars per sandals) 112 98 86 Discounted price Original price Ciana earns an hourly wage of $42 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 $42 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 sandals, 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 (Dollars) Price of a Sandals (Dollars per sandals) 112 98 86 Total Cost (Dollars) Assume that Ciana considers both her opportunity costs and the price of sandals when making her shopping decision. Ciana will minimize her cost of buying the sandals if she shops at the
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.2P
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Transcribed Image Text:Suppose that Ciana 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 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 $112 for
the sandals:
Store
Local Shoe Store
Different Neighborhood in Town
Rural Outlet
Travel Time Each Way
(Minutes)
15
30
60
Store
Local Shoe Store
Different Neighborhood in Town
Marked-up
price
Rural Outlet
Juanita's office
Price of a Sandals
(Dollars per sandals)
112
98
86
Discounted
price
Ciana earns an hourly wage of $42 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 $42 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 sandals, such as
gas.
Original price
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
(Dollars)
Price of a Sandals
(Dollars per sandals)
112
98
86
Total Cost
(Dollars)
Assume that Ciana considers both her opportunity costs and the price of sandals when making her shopping decision. Ciana will minimize her cost of
buying the sandals if she shops at the
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