Question

2. Assuming ceteris paribus, think of a product or service that the variable price is significant on your purchasing that product or service. How much of that are you willing to purchase, based on price only?

3. Next think of opportunity cost . What is something of a larger scale that you must consider opportunity costs before purchasing it? What is it that you would have to give up in order to purchase that good or service? Explain.

Be sure to give complete answers to each question and provide examples.

Answer 1

In this case assume ceteris paribus it means other things remaining the same then a product or service which can be affected by its variable price and it plays are significant role on purchasing the product or services so from the point of view of a consumer the consumer is willing to purchase the commodity on the basis of price on the then the commodity must be of the nature of adjusted according to the price of the commodity for example fruits.

Fruits are not a necessity goods but when a consumer is going to purchase fruits from the market then consumer must consider the price of the fruit if the consumer found that fruits are of low price then is going to purchase more of it and vice versa.

In the second case when we talk about opportunity cost then it means the value of next best activity so when we are considering a large scale then the opportunity cost matters a lot because it involve a huge value.

Lexicon example or investment in two major projects and this project belongs to Urban Sector project and rural sector project so in this case when we talked about the real time investment of industries where infrastructure matters a lot then we must consider the Urban Sector project and to sacrifice the rural sector project but when there is a matter of organic farming then the rural sector project is good for the rate of return in comparison to Urban Sector project.