Juanita makes $30 an hour at work . She has to take time off work to purchase her suit, so each hour away from work costs her $30 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. 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 (Dollars) Price of a Suit (Dollars per suit) Total Cost (Dollars)
Local Department Store _______________ 114 _
Across Town ___________ 86 _
Neighboring City ____________ 60 _
Assume that Juanita takes opportunity costs and the price of the suit into consideration when she shops. Juanita will minimize the cost of the suit of she buys it from the _

Question

31-07-2020
Business

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Juanita makes $30 an hour at work . She has to take time off work to purchase her suit, so each hour away from work costs her $30 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. 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 (Dollars) Price of a Suit (Dollars per suit) Total Cost (Dollars)
Local Department Store _______________ 114 _
Across Town ___________ 86 _
Neighboring City ____________ 60 _
Assume that Juanita takes opportunity costs and the price of the suit into consideration when she shops. Juanita will minimize the cost of the suit of she buys it from the _

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jepessoa jepessoa · Answer 1 · 2020-08-03T06:19:03+02:00

Answer:

Juanita should purchase the suit at the store across town because the total economic cost will be lowest.

Explanation:

three options:

local store 15 minutes away and a price of $114
across town 30 minutes away and a price of $86
neighboring city 1 hour away and a price of $60

Juanita makes $30 per hour at her work, and her purchase decision includes the opportunity cost of lost wages:

total economic cost:

local store = $114 + [1/4 hours x 2 (round trip) x $30] + (1/2 hours x $30 spent shopping) = $144
across town = $86 + [1/2 hours x 2 (round trip) x $30] + (1/2 hours x $30 spent shopping) = $131
neighboring city = $60 + [1 hour x 2 (round trip) x $30] + (1/2 hours x $30 spent shopping) = $135

Juanita should purchase the skirt at the store across town because the total economic cost will be lowest ($131)

Opportunity costs are the benefits lost or extra costs incurred for choosing one activity or investment over another alternative. Economic costs include both accounting costs and opportunity costs.

topeadeniran2 topeadeniran2 · Answer 2 · 2022-01-25T21:55:07+01:00

Based on the information given, the opportunity cost of time in the local department store will be $144.

Solving the opportunity cost.

The opportunity cost of time across town will be:

= 1.5 × 30 = $45.

The total cost will be:

= $45 + $86 = $131

The opportunity cost of time in the neighboring city will be:

= 2.5 × 30 = $75

The total cost will be:

= $75 + $60 = $135

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