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Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

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BuyFindarrow_forward

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
Chapter 5, Problem 3TY
Textbook Problem
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Emily buys an air conditioner that costs $700. Because the air in her home is cleaner, its use saves her $250 in curtain cleaning costs over the lifetime of the air conditioner. In money terms, what is the opportunity cost of the air conditioner?

To determine

The opportunity cost of the air conditioner.

Explanation of Solution

The opportunity cost of a resource is the best higher valued alternative use of that resource. Here resource can be money, time, capital, and so on.

Since person E buys an air conditioner that costs $700, with this purchasing she can save $250 which is the ...

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