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Chapter 2: Q 3 (page 45)

You and a friend decide to spend \(100 each on concert tickets. Each of you alternatively could have spent the \)100 to purchase a textbook, a meal at a highly-rated local restaurant, or several Internet movie downloads. As you are on the way to the concert, your friend tells you that if she had not bought the concert ticket, she would have opted for a restaurant meal, and you reply that you otherwise would have downloaded movies. Identify the relevant opportunity costs for you and your friend for the concert tickets that you purchased. Explain briefly.

Short Answer

Expert verified

The opportunity cost for you is downloading movies and the opportunity cost for your friend is a meal at a restaurant.

Step by step solution

01

Step 1. Opportunity cost.

Opportunity cost is the cost foregone for the alternative choices to satisfy wants.

02

Step 2. The opportunity cost for each person.

The opportunity cost for you is downloading movies and the opportunity cost for your friend is a meal at a restaurant because these are the opportunities that they will miss for purchasing the concert ticket.

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Most popular questions from this chapter

If the U.N. follows through on a proposal to add production targets for 148 more items to its Sustainable Development Goals, why might we expect that the opportunity cost in terms of other goods and services that must be forgone could be even greater? Explain briefly.

Using only the concept of comparative advantage, evaluate this statement: “A professor with a Ph.D. in physics should never mow his or her own lawn, because this would fail to take into account the professor's comparative advantage."

Discuss why obtaining increasing increments of any particular good typically entails giving up more and more units of other goods.

Construct a production possibilities curve for a nation facing increasing opportunity costs for producing food and video games. Show how the PPC

changes have given the following events.

(a) A new and better fertilizer is invented.

(b) Immigration occurs, and immigrants’ labor can be employed in both the agricultural sector and the video game sector.

(c) A new programming language is invented that is less costly to code and is more memory-efficient, enabling the use of smaller game cartridges.

(d) A heat wave and drought result in a 10 percent decrease in usable farmland.

Suppose that in Fig 2-24, the nation with other wise the same background conditions as in Problem 2-23 currently has sufficient resources to produce combinations located along only the innermost production possibilities curve. If the nation produces no additional smartphones this year, will the intermediate-shifted PPC resulting from minimal economic growth or the farthest shifted PPC caused by more significant economic growth be more likely to apply next year?
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