Describe some of the opportunity costs when you decide to do the following. a. A
ID: 1255315 • Letter: D
Question
Describe some of the opportunity costs when you decide to do
the following.
a. Attend college instead of taking a job
b.Watch a movie instead of studying for anexam
c. Ride the bus instead of driving your car
In the following examples, state how you would use theprinciple
of marginal analysis to make a decision.
a. Deciding how many days to wait before doingyour laundry
b. Deciding how much library research to dobefore writing
your term paper
c. Deciding how many bags of chips to eat
d. Deciding how many lectures of a class toskip
Explanation / Answer
The opportunity cost of anything is defined as the next bestthing (in your eyes) that you're giving up to do the action.
A) You go to college and pay the school so you forgo free timewhere you could have a job and make money.
B) You use your time to watch a movie instead of studying andgetting a better exam grade.
C) You take the bus and give up time that the bus takes at eachstop instead of taking your car so you have less sleep beforework.
Marginal analysis is looking at cost and benefit of another unitof something
A) You don't do laundry after 1 day because you have a crap loadof other clothes, but as you have less and less, the marginal costof not doing laundry gets higher and higher until all you have issweaty gym clothes so you do laundry.
B) You start doing research and the paper has to be 5pages. After 5 minutes you have enough info for 1 sentence soyou don't stop because you'll fail. After an hour you've gotenough info to write the paper so the benefit of another hour ofstudying outweighs the cost because you have the info to get anA.
C) You're really hungry at first so the first chip isreally satisfying (the benefit of eating outweighs the unhealthycost of fat). After you eat half the bag, you're sick of thechips and you're not hungry so why continue to eat (costlarger than benefit).
D) You want a B in a class. This means you can onlymiss 3 lectures. So skipping 1 is okay but when you get tothe 4th lecture possibly skipped your cost of a letter gradeoutweighs the benefit of sleeping in.
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