Question

Store Travel Time Each Way Price of a Dress

(Minutes) (Dollars per dress)
Local Department Store 15 104
Across Town 30 87
Neighboring City 60 80
Juanita makes $36 an hour at work. She has to take time off work to purchase her dress, so each hour away from work costs her $36 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 location.
Store Opportunity Cost of Time Price of a Dress Total Cost
(Dollars) (Dollars per dress) (Dollars)
Local Department Store 104
Across Town 87
Neighboring City 80
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 the:____________ .

Answer 1

A.

1.Local department store

Opportunity cost of time=$36

Total cost=$140

2. Across town

Opportunity cost = $54

Total cost=$141

3. Neighboring city

Opportunity cost=$90

Total cost=$170

B. Local department store

Step-by-step explanation:

A. Computation of the opportunity cost of Juanita's time and the total cost of shopping at each location

First step is to computer the Opportunity cost of time and Total cost

1. LOCAL DEPARTMENT STORE

Opportunity cost of time =(15+15+30)*36/60 Opportunity cost of time=$36

Total cost = $104+$36

Total cost=$140

2. ACROSS TOWN

Opportunity cost = (30+30+30)*36/60 Opportunity cost = $54

Total cost =$87+$54

Total cost=$141

3. NEIGHBORING CITY

Opportunity cost =(60+60+30)*36/60

Opportunity cost=$90

Total cost =$80+$90

Total cost=$170

Now let complete the table

Store Opportunity Cost of Time Price of a Dress Total Cost

1. Local department store $36 +104=$140

2. Across town $54+$87=$141

3. Neighboring city $90+$80=$170

B. Based on the above calculation Juanita will minimize the cost of the dress if she buys it from the LOCAL DEPARTMENT STORE reason been that it takes lesser time as well as lesser opportunity cost compare to Across town and Neighboring city.