Chapter 3, Problem 20AA

To determine

What steps might Jolene take being a rational consumer, to help her decide which product to buy considering the opportunity cost.

Answer to Problem 20AA

If Jolene chooses to buy an MP3 player and not the used computer, the opportunity cost to her would be her homework and moreover her career which should not be sacrificed for any kind of entertainment.

Explanation of Solution

Considering the case of Jolene, she has the option of buying either the MP3 player for her entertainment or the used computer for her own help to do her homework. Being a rational consumer, Jolene will try to know the satisfaction she will be getting after purchasing either of the commodities.

Apart from the $200 Jolene is going to spend, she should be making a rational choice of selecting the used computer over the MP3 player. If she considers buying the MP3 player instead of the used computer, she has a huge opportunity cost of sacrificing her homework which can be a high cost on her career & her personal development.

Economics Concept Introduction

Introduction:

Opportunity cost: This term can be easily explained as “The next best alternative” which explains that when a consumer has options to buy from two commodities available, he/she will go for the commodity which provides more satisfaction or has more value to the person, sacrificing the other commodity. That sacrifice he/she makes is the opportunity cost.