Question

You are going to buy a new computer at a downtown store that is a 25-minute drive each way and has the computer for $900. You earn $16 per hour at your job and will have to take time off to go buy the computer. You can expect to spend 40 minutes in the store making your purchase. What is the opportunity cost of buying the computer, measured in dollars? Enter an answer such as 42.00 or 34.50, with two decimal places. Do not enter a dollar sign.

Answer 1

Answer: The opportunity cost of buying computer is $337.5.

Step-by-step explanation:

The total time taken in travelling to buy a computer at a downtown store:

= 25 minutes for one side × 2

= 50 minutes

Given that,

expect 40 minutes spend in a store for making purchase

So,

total time taken by a individual = time taken in a store + time taken in travelling

= (50 + 40) minutes

= 90 minutes

Also given that,

a individual earns $16 per hour at job

Hence, he earns =
`(60)/(16)`

= $3.75 per minute

so,

Total opportunity cost = earning per minute × total time taken

= $3.75 × 90 minutes

= $337.5