Question

Celina worked her way through law school as a typist. She now makes $200 per hour as a lawyer. As the result of a heavy workload, she hires a typist at $25 per hour, but Celina discovers she can type twice as fast as her new employee. Should Celina do her own typing? a. Yes, if she can continue to type twice as fast as her new employee. b. Yes, because it will cost less to do her own typing than to hire someone to do it. c. Yes, if she does not, she will waste the time invested developing her typing skills. d. No, even though Celina types faster than her new employee, her opportunity cost of doing any given amount of typing will exceed that of her new employee.

Answer 1

Answer: Option D

Step-by-step explanation: Opportunity cost refers to the cost of of loosing the profits by choosing one alternative over the other.

In the given case, if Celina decides to do her own typing then she will earn $100 in one hour, but at the same time she will loose an income of $200 in an hour.

Thus, the opportunity cost of doing the typing would be more than the benefit she receives from doing so. Hence she should keep working as a lawyer.

Hence from the above we can conclude that the correct option is D.