An article in Forbes looks at the role of opportunity cost in financial decision making. According to the article, “[w]hile most people are aware of the direct costs of life - for example, when you take money out of your wallet to buy a cheeseburger - many ignore the indirect costs associated with those actions. These are the opportunity costs.” A little later, the article states, “let's say you can choose between eating the aforementioned cheeseburger meal and putting $4.50 into savings. Each choice has benefits and drawbacks. If you choose the burger, you will likely have a nice lunch and a chance to leave the office. If you choose to save the money, you give up that break time and good food, but you get the chance to earn interest on that $4.50. That will give you more money in the future. Either way, you stand to gain and lose something. Every time you make a choice, you're weighing the opportunity cost of that action.”

Using positive economic reasoning, does the article appropriately use the concept of “opportunity cost”?

• A. Yes, there is a choice between saving and buying a cheeseburger. If you buy lunch, you forgo saving the money.
• B. Yes, there is a choice between saving and buying a cheeseburger. If you save the money, you forgo buying lunch.
• C. No, you can both buy a cheeseburger and save, so there is no opportunity cost in this instance.
• D. No, opportunity cost is the value of the next best thing you forgo. Very likely, the next best thing would be another food stuff (e.g., a sandwich) and not financial investment.
• E. Both choices (A) and (B) above.

Has the reduction of mobility due to the COVID-19 pandemic increased or reduced the cost of living?

According to The New Geography of Jobs, Americans have historically been mobile, continually seeking new opportunities to improve their lives. The COVID-19 pandemic has caused people to remain indoors, and even some States have prevented unnecessary movement of people from one place to another. It is a huge change for many Americans who depend on constant mobility for their economic survival. As such, with reduced mobility, one wonders, has the cost of living increased or reduced? On one hand, less movement means that less spending in terms of relocation and money spent to travel and buy other resources needed. On the other hand, it has reduced opportunities for earning a living. While the government and corporations are aware of the economic impacts of the pandemic, it is essential to know whether people's cost of living is higher as now people are less likely to spend on unnecessary items.

A firm recently stated that an extra unit of labor is expected to cost them $8.00 while an extra unit of capitol will cost $15.00. Likewise, they claim that each extra unit of labor will increase output by 24 units while each extra unit of capitol will produce an extra 40 units of output. the firm wishes to offer you a part time job. using economic analysis, evaluate this decision on the part of the firm

. Determining opportunity cost

Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three stores carry the same suit, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $129 for the suit:

Juanita makes $50 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $50 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.

Assume that Juanita takes opportunity costs and the price of the suit into consideration when she shops. Juanita will minimize the cost of the suit if she buys it from the   .

Many employers offer their employees a choice of plans, paying a fixed share of the cost of each. What inefficiencies does this introduce? Some employers, such as Stanford University, have instead offered a fixed payment, regardless of the plan chosen, and have insisted that all programs offer identical coverage. Within three years, the cost of providing this standard coverage fell by 20 percent in real terms. Explain why this may have happened

When the opportunity cost of capital (or discount rate) increases, how is that increase likely to affect the economic profitability of a proposed project

Illustrate scarcity, opportunity cost, and economic growth within a PPF framework of analysis

12. Suppose that a farmer is a price taker for potato sales with cost functions given by T C = 0.1q 2 + 2q + 100 MC = 0.2q + 2 The firm’s supply curve is given by

(a) q = 2P − 5

(b) q = 5P − 10

(c) q = 1/2P + 2

(d) q = 10P − 2

Consider the cost functions of Frank the farmer given above. If P = $6, the profit-maximizing level of output is

(a) 80

(b) 40

(c) 20

(d) 10

[Monopoly Pricing] A monopolist operates with the following data on cost and de- mand. It has a total fixed cost of $1,500 and a total variable cost of Q2, where Q is the number of units of output it produces. The market demand function is Qd = 60 − 0.5P . The firm expects the conditions of demand and cost to continue in the foreseeable future.

1. (a) What is the profit maximizing monopoly price and quantity?

2. (b) What is the dead weight loss from the monopoly pricing?

3. (c) Should the firm continue to operate in the short run, or should it shut down? Explain briefly.