Answered: Complete the following table by…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 1SCQ: Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can...

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Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three stores carry the same suit, 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 $112 for the suit:

Juanita makes $26 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $26 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. (look at screenshot)

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 if she buys it from the _________ (options: store across town, local department store, store in the neighoring city).

Juanita is deciding whether to buy a suit that she wants, as
well as where to buy it. Three stores carry the same suit,
but it is more convenient for Juanita to get to some stores
than others. For example, she can go to her local store,
Discounted
price
Marked-up
price
located 15 minutes away from where she works, and pay a
marked-up price of $112 for the suit:
Juanita's office
Original price
Travel Time Each Way
Price of a Suit
Store
(Minutes)
(Dollars per suit)
Local Department Store
15
112
Across Town
30
89
Neighboring City
60
70
Juanita makes $26 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $26 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.
Opportunity Cost of Time
Price of a Suit
Total Cost
Store
(Dollars)
(Dollars per suit)
(Dollars)
Local Department Store
112
Across Town
89
Neighboring City
70
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 if
she buys it from the
II

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