Question

It’s Friday and you have just picked up your paycheck from your part-time job. After taxes you have made $172.83 over the last two weeks. What are you going to do with the money? List the specific amounts you would spend and what you would spend them on. Describe the tradeoffs and opportunity costs involved in your decisions.

Answer 1

With my paycheck, I am going to purchase one hundred dollars in groceries, fifty dollars in gas, and save the remaining cash. Groceries must be bought, and gas has to be in the vehicle to make it back to work the following week. The remaining cash can serve me should some random purchase come up, otherwise I would assume save it.

Answer 2

With the net value of my salary of $ 172.82 I will pay for a music course that costs $ 72.82, I will buy $ 50 in computer games and I will set aside another $ 50 to use on weekends when I go to the movies. I decided to spend my money on these activities because they bring me a greater satisfaction benefit than if I used the money on other activities. However, of course, the opportunity cost (which you give up on money for opting to spend it) exists because I fail to earn a considerable income from my bank application, ie I could make my money yield but I prefer to use it at my leisure.