Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 1: Q4 (page 17)

Suppose that you are given a \(100 budget at work that can be spent only on two items: staplers and pens. If staplers cost \)10 each and pens cost $2.50 each, then the opportunity cost of purchasing one stapler is

a. 10 pens.

b. 5 pens.

c. zero pens.

d. 4 pens.

Short Answer

Expert verified

Option (d): 4 pens

Step by step solution

01

Meaning of opportunity cost

Opportunity cost is the cost incurred on the forgone commodity by the decision-maker. In other words, it is the cost occurred to the consumer on the sacrifice of one good for another.

For example, suppose a farmer decides to cultivate rice instead of potatoes on a piece of land. In that case, the opportunity cost is the loss to the farmer for not choosing potatoes for cultivation.

02

Estimating the opportunity cost of one stapler

The price of one stapler is $10, and the price of one pen is $2.50. For each unit of the stapler, the consumer will have to sacrifice the purchase of 4 pens.Thus, the opportunity cost of one stapler is 4 pens. Hence, option (c) is correct.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Cite three examples of recent decisions you made in which you, at least implicitly, weighed marginal cost and marginal benefit.

What are the two major ways in which an economy can grow and push out its production possibilities curve?

  1. Better weather and nicer cars
  2. Higher taxes and lower spending
  3. Increases in resource supplies and advances in technology
  4. Decreases in scarcity and advances in auditing

Because investment and capital goods are paid for with savings, higher savings rates reflect a decision to consume fewer goods in the present to invest in more goods for the future. Households in China save 40 percent of their annual incomes each year, whereas U.S. households save less than 5 percent. At the same time, production possibilities are growing at roughly 7 percent per year in China but only about 3.0 percent per year in the United States. Use graphical analysis of ‘present goods’ versus ‘future goods’ to explain the difference between China's growth rate and the U.S. growth rate.

Why is money not considered to be a capital resource in economics? Why is entrepreneurial ability considered a category of the economic resource, distinct from labor? What roles do entrepreneurs play in the economy?

Pham can work as many or as few hours as she wants at the college bookstore for \(12 per hour. But due to her hectic schedule, she has just 15 hours per week that she can spend working at either the bookstore or other potential jobs. One potential job at a café will pay her \)15 per hour for up to 6 hours per week. She has another job offer at a garage that will pay her \(13 an hour for up to 5 hours per week. And she has a potential job at a daycare center that will pay her \)11.50 per hour for as many hours as she can work. If her goal is to maximize the amount of money she can make each week, how many hours will she work at the bookstore?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free