ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337408059
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 2, Problem 2P
To determine
The
Concept Introduction:
Opportunity Cost: Opportunity cost is the opportunity lost by choosing one alternative over the other.
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Students have asked these similar questions
Store
Travel Time Each Way (minutes)
Price of a Skirt
(Dollars per skirt)
Local Department Store
15
103
Across Town
30
87
Neighboring City
60
64
Juanita makes $16 an hour at work. She has to take time off work to purchase her skirt, so each hour away from work costs her $16 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.
Store
Opportunity Cost of Time
Price of a Skirt
Total Cost
(Dollars)
(Dollars per skirt)
(Dollars)
Local Department Store
103
Across Town
87
Neighboring City
64
Only typed answer
Barney decides to quit his job as a corporate accountant, which pays $11,000 a month, and goes into business for himself as a certified public accountant.
He runs his business from his converted garage apartment, which he could rent out for $305 a month if he wasn’t using it as a home office. He must purchase office supplies worth $70 a month, and his monthly electricity bill has increased by $50 now that he is working out of his home office.
After six months of working from home, Barney has earned an average of $19,000 per month.
Instructions: Enter your answers as a whole number.
a. What are Barney’s monthly explicit costs?
$
b. What are Barney’s monthly implicit costs?
$
c. What are Barney’s monthly economic costs?
$
Identify three categories of opportunity costs that you will incur for getting a university
degree. (10 points)
Chapter 2 Solutions
ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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