Give an example that illustrates that when a person’s opportunity cost goes up that the person...

Give an example that illustrates that when a person’s opportunity cost goes up that the person will be financially better off. Use a numerical example in illustrating your point.

Expert Solution

Answer : When a person becomes financially better off then the person like to spend times in luxurious way and try to spend times by travel rather than spend time on earning.

For example : Let a wealthy business person in 15 days can earn $100,000. But the person spends and enjoys this 15 days on travel. Now here because of 15 days travel the person loses his earning of $100,000. This losing $100,000 is the opportunity cost to that person.

On the other side, if the person is not wealthy too much then the person will not spend this 15 days on traveling enjoyment. The person will spend this 15 days on earning $100,000. Here the losing 15 days enjoyment on traveling is the opportunity cost to the person.

Now here it is clear that the wealthy person's opportunity cost is higher than the non-wealthy person. This means that when a person is financially better off then the person's opportunity cost goes up.

Rahul Sunny answered 2 years ago

2.)What is Opportunity Cost (Define and Explain) ? Give an example of an Opportunity Cost. -3.)...

2.)What is Opportunity Cost (Define and Explain) ? Give an example of an Opportunity Cost. -3.) What is a Demand Schedule & Demand Curve (Define and Explain)? What does a Demand Schedule and Demand Curve tell (State) in economics?

Give an example of lost opportunity cost and obsolescence and discuss their impact on inventory carrying...

Give an example of lost opportunity cost and obsolescence and discuss their impact on inventory carrying costs.

Suppose we can think of dividing a person’s working years up into three periods. The person...

Suppose we can think of dividing a person’s working years up into three periods. The person has three alternatives. The first is for her to start working immediately, earning $100,000 ($100k) in period 1, $110k in period 2, and $90k in period 3. The second is to spend $50k to attend college in period 1, then earn $180k in each of periods 2 and 3. The third is to attend college in period 1 (as in the previous option), attend...

Give an explanatory (numerical) example that illustrates a market failure in the market for used cars....

Give an explanatory (numerical) example that illustrates a market failure in the market for used cars. Please includes an overlap in prices for each quality type and market failure.

1. Give an example of an observation made with the microscope which illustrates the concepts/terms: a....

1. Give an example of an observation made with the microscope which illustrates the concepts/terms: a. Depth of field b. Contrast c. Field of view

23. Which of the following is not an example of the opportunity cost of going to...

23. Which of the following is not an example of the opportunity cost of going to school? a. The nap a student could have enjoyed if he had not attended class. b. The money a student could have earned by working if he had not gone to college. c. The party a student could have enjoyed if he had not stayed in to study for his exam. d. The money a student spends on rent for his apartment while attending...

The cost of controlling emissions at a firm goes up rapidly as the amount of emissions...

The cost of controlling emissions at a firm goes up rapidly as the amount of emissions reduced goes up. Here is a possible model: C(x, y) = 1,000 + 200x2 + 200y2 where x is the reduction in sulfur emissions, y is the reduction in lead emissions (in pounds of pollutant per day), and C is the daily cost to the firm (in dollars) of this reduction. Government clean-air subsidies amount to $100 per pound of sulfur and $200 per...

Suppose that, in each period, the cost of a security either goes up by a factor...

Suppose that, in each period, the cost of a security either goes up by a factor of u = 2 or down by a factor d = 1/2. Assume the initial price of the security is $100 and that the interest rate r is 0. a). Compute the risk neutral probabilities p (price moves up) and q = 1−p (price moves down) for this model b). Assuming the strike price of a European call option on this security is $150,...

as wages go up, what happens to opportunity cost of leisure

You are considering a project with an opportunity cost of 10% and that offers up the...

You are considering a project with an opportunity cost of 10% and that offers up the following two possible payouts based on your ability to market the product: In the optimistic state you expect the following payouts, -$4,795, $8,000, $8,000. Based on your pessimistic expectations you expect the following -$4,795, -$500, -$10,000. The cash flows fall at time period 0, 1 and 2. Your sense is that there is a 40% chance things will turn out well and a 60%...

Question