1. Determining opportunity costJuanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $103 for the skirt:    StoreTravel Time Each WayPrice of a Skirt(Minutes)(Dollars per skirt)Local Department Store15103Across Town3089Neighboring City6063 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.StoreOpportunity Cost of TimePrice of a SkirtTotal Cost(Dollars)(Dollars per skirt)(Dollars)Local Department Store 103 Across Town 89 Neighboring City 63  Assume that Juanita takes opportunity costs and the price of the skirt into consideration when she shops. Juanita will minimize the cost of the skirt if she buys it from the    .

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Asked Sep 12, 2019
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1. Determining opportunity cost

Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $103 for the skirt:
  
 
 
Store
Travel Time Each Way
Price of a Skirt
(Minutes)
(Dollars per skirt)
Local Department Store 15 103
Across Town 30 89
Neighboring City 60 63
 
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
 
89
 
Neighboring City
 
63
 
 
Assume that Juanita takes opportunity costs and the price of the skirt into consideration when she shops. Juanita will minimize the cost of the skirt if she buys it from the    .
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Expert Answer

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Step 1

Opportunity cost refers to the cost incurred to acquire the next best alternative. It is being provided that Juanita earns $16 per hour. That is there will be a $16 loss in income if she does not work for an hour. It is also provided that she took 30 minutes to shop.

Step 2

If she shops from a local departmental store then she will take 60 minutes to come back to the office. If she shops from across town, it will take her 90 minutes or 1.5 hours to get back to the office. If she shops from a neighboring town, she will take 150 minutes that is 2.5 hours. So by multiplying ...

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Opportunity Cost of Time Price of a Skirt Total cost Store(Dollars) Local Departmental Store 103 119 16 Across Town 24 89 113 Neighboring City 40 63 103

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