To ascertain: the better for a person in a given situation and the opportunity cost of that deal.

Question

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Answer 1

Question

Chapter 3, Problem 1TY

To determine

To ascertain: the better for a person in a given situation and the opportunity cost of that deal.

Expert Solution & Answer

Explanation of Solution

The rent of the house is $24000 per year.

The person has $200,000 in the bank account that pays 4% interest per year.

So, the annual return on bank saving is $8,000.

If the person buys the house, he/she can save $16,000 (= $24,000 - $8,000) per year because he/she has to forgo $8,000 interest payment on the amount deposited in the bank. Therefore, buying a house is a good deal for the person.

The interest earned on the amount deposited in the bank ($8,000) is the opportunity cost of buying a house because the person is foregoing interest receipts when he/she puts the amount of $200,000 in the purchase of the house.

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Answer 2

Question

Chapter 3, Problem 1TY

To determine

To ascertain: the better for a person in a given situation and the opportunity cost of that deal.

Expert Solution & Answer

Explanation of Solution

The rent of the house is $24000 per year.

The person has $200,000 in the bank account that pays 4% interest per year.

So, the annual return on bank saving is $8,000.

If the person buys the house, he/she can save $16,000 (= $24,000 - $8,000) per year because he/she has to forgo $8,000 interest payment on the amount deposited in the bank. Therefore, buying a house is a good deal for the person.

The interest earned on the amount deposited in the bank ($8,000) is the opportunity cost of buying a house because the person is foregoing interest receipts when he/she puts the amount of $200,000 in the purchase of the house.

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Answer 3

Question

Chapter 3, Problem 1TY

To determine

To ascertain: the better for a person in a given situation and the opportunity cost of that deal.

Expert Solution & Answer

Explanation of Solution

The rent of the house is $24000 per year.

The person has $200,000 in the bank account that pays 4% interest per year.

So, the annual return on bank saving is $8,000.

If the person buys the house, he/she can save $16,000 (= $24,000 - $8,000) per year because he/she has to forgo $8,000 interest payment on the amount deposited in the bank. Therefore, buying a house is a good deal for the person.

The interest earned on the amount deposited in the bank ($8,000) is the opportunity cost of buying a house because the person is foregoing interest receipts when he/she puts the amount of $200,000 in the purchase of the house.

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Answer 4

Question

Chapter 3, Problem 1TY

To determine

To ascertain: the better for a person in a given situation and the opportunity cost of that deal.

Expert Solution & Answer

Explanation of Solution

The rent of the house is $24000 per year.

The person has $200,000 in the bank account that pays 4% interest per year.

So, the annual return on bank saving is $8,000.

If the person buys the house, he/she can save $16,000 (= $24,000 - $8,000) per year because he/she has to forgo $8,000 interest payment on the amount deposited in the bank. Therefore, buying a house is a good deal for the person.

The interest earned on the amount deposited in the bank ($8,000) is the opportunity cost of buying a house because the person is foregoing interest receipts when he/she puts the amount of $200,000 in the purchase of the house.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 3, Problem 1TY

To determine

To ascertain: the better for a person in a given situation and the opportunity cost of that deal.

Expert Solution & Answer

Explanation of Solution

The rent of the house is $24000 per year.

The person has $200,000 in the bank account that pays 4% interest per year.

So, the annual return on bank saving is $8,000.

If the person buys the house, he/she can save $16,000 (= $24,000 - $8,000) per year because he/she has to forgo $8,000 interest payment on the amount deposited in the bank. Therefore, buying a house is a good deal for the person.

The interest earned on the amount deposited in the bank ($8,000) is the opportunity cost of buying a house because the person is foregoing interest receipts when he/she puts the amount of $200,000 in the purchase of the house.

Answer 6

Chapter 3, Problem 1TY

To determine

To ascertain: the better for a person in a given situation and the opportunity cost of that deal.

Expert Solution & Answer

Explanation of Solution

The rent of the house is $24000 per year.

The person has $200,000 in the bank account that pays 4% interest per year.

So, the annual return on bank saving is $8,000.

If the person buys the house, he/she can save $16,000 (= $24,000 - $8,000) per year because he/she has to forgo $8,000 interest payment on the amount deposited in the bank. Therefore, buying a house is a good deal for the person.

The interest earned on the amount deposited in the bank ($8,000) is the opportunity cost of buying a house because the person is foregoing interest receipts when he/she puts the amount of $200,000 in the purchase of the house.

Answer 7

Chapter 3, Problem 1TY

To determine

To ascertain: the better for a person in a given situation and the opportunity cost of that deal.

Answer 8

Expert Solution & Answer

Explanation of Solution

The rent of the house is $24000 per year.

The person has $200,000 in the bank account that pays 4% interest per year.

So, the annual return on bank saving is $8,000.

If the person buys the house, he/she can save $16,000 (= $24,000 - $8,000) per year because he/she has to forgo $8,000 interest payment on the amount deposited in the bank. Therefore, buying a house is a good deal for the person.

The interest earned on the amount deposited in the bank ($8,000) is the opportunity cost of buying a house because the person is foregoing interest receipts when he/she puts the amount of $200,000 in the purchase of the house.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 3 - Prob. 1TY Ch. 3 - Prob. 2TY Ch. 3 - Prob. 3TY Ch. 3 - Prob. 4TY Ch. 3 - Prob. 1DQ Ch. 3 - Prob. 2DQ Ch. 3 - Prob. 3DQ Ch. 3 - Prob. 4DQ Ch. 3 - Prob. 5DQ

To ascertain: the better for a person in a given situation and the opportunity cost of that deal.

To ascertain: the better for a person in a given situation and the opportunity cost of that deal.

Explanation of Solution

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Chapter 3 Solutions