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, Discounted price Marked-up price located 15 minutes away from where she works, and pay a marked-up price of $103 for the skirt: Juanita's office Original price Travel Time Each Way Price of a Skirt Store (Minutes) (Dollars per skirt) Local Department Store 15 103 Across Town 30 85 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. Travel Time Each Way Price of a Skirt (Dollars per skirt) (Minutes) Store Local Department Store 15 103 Across Town 30 85 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. Price of a Skirt Total Cost Opportunity Cost of Time (Dollars per skirt) Store (Dollars) (Dollars) Local Department Store 103 Across Town 85 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
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, Discounted price Marked-up price located 15 minutes away from where she works, and pay a marked-up price of $103 for the skirt: Juanita's office Original price Travel Time Each Way Price of a Skirt Store (Minutes) (Dollars per skirt) Local Department Store 15 103 Across Town 30 85 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. Travel Time Each Way Price of a Skirt (Dollars per skirt) (Minutes) Store Local Department Store 15 103 Across Town 30 85 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. Price of a Skirt Total Cost Opportunity Cost of Time (Dollars per skirt) Store (Dollars) (Dollars) Local Department Store 103 Across Town 85 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
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.2P
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Transcribed Image Text: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,
Discounted
price
Marked-up
price
located 15 minutes away from where she works, and pay a
marked-up price of $103 for the skirt:
Juanita's office
Original price
Travel Time Each Way
Price of a Skirt
Store
(Minutes)
(Dollars per skirt)
Local Department Store
15
103
Across Town
30
85
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.
Transcribed Image Text:Travel Time Each Way
Price of a Skirt
(Dollars per skirt)
(Minutes)
Store
Local Department Store
15
103
Across Town
30
85
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.
Price of a Skirt
Total Cost
Opportunity Cost of Time
(Dollars per skirt)
Store
(Dollars)
(Dollars)
Local Department Store
103
Across Town
85
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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