Sara works for Steve, whom she dislikes because of his snobbish attitude. Yet when she looks...

Sara works for Steve, whom she dislikes because of his snobbish attitude. Yet when she looks for other jobs, the best she can do is find a job paying $10,000 less than her current salary. Should she take the job? Analyze Sara’s situation from an economic point of view.

Expert Solution

Sara works for Steve, but she dislikes working for him.

She can find another job which pays $10,000 less than her current salary which one can assume as $20,000. Thus the best she can find is a job paying $10,000.

Now if her opportunity cost is higher of taking the job than she should opt to take the job.

For example she earns $20,000 in her current job, but if her health expenditure is $12,000 because of stress and she constantly takes vacations by spending more. Thus she spends more and saves only $8,000.

Whereas in the next job if her health expenditure reduces drastically and she takes fewer vacations, she spends just $1,000. Keeping her savings $9,000 which are more than the previous job.

Thus she gets a better advantage if whatever current situation she is in has a lower opportunity cost, which basically means she is missing very less if she foregoes or lets go another opportunity. Based on that she should make the choice of whether she should take the job or not.

Rahul Sunny answered 2 years ago

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