A: store in the neighboring city B. local department store C. store across town
ID: 1132798 • Letter: A
Question
A: store in the neighboring city
B. local department store
C. store across town
Juanita is deciding whether to buy a dress that she wants, as well as where to buy it. Three stores carry the same dress, 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 $114 for the dress: price price Juanita's office Original price Travel Time Each Way Price of a Dres:s Store Minutes 15 30 Dollars per dress 114 86 Local Department Store Across Town Neighboring City 60 60 Juanita makes $30 an hour at work. She has to take time off work to purchase her dress, so each hour away from work costs her $30 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 loca tionn Opportunity Cost of Time Dollars Price of a Dress Total Cost Dollars Store Local Department Store Dollars per dress 114 86 Across Town Neighboring City 60 Assume that Juanita takes opportunity costs and the price of the dress into consideration when she shops. Juanita will minimize the cost of the dress if she buys it from theExplanation / Answer
Store
Total Travel Time + Shopping time= total time
Opportunity cost of time
LDS
60
30
Across town
90
45
Neighbouring City
150
75
Store
Opportunity cost of time (Dollars)
Price of a Dress (Dollars per dress)
Total Cost (Dollars)
LDS
30
114
144
Across town
45
86
131
Neighbouring City
75
60
135
Option C.
Juanita will minimize the cost of the dress if she buys from store across town
Store
Total Travel Time + Shopping time= total time
Opportunity cost of time
LDS
60
30
Across town
90
45
Neighbouring City
150
75
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