Question

Emily works in the stockroom at a retail store for $10/hour on Saturdays. The store is within near walking distance of her home. She can make $15/hour by babysitting on Saturday, but she must spend $2 on gas to drive to her babysitting job. What costs must Emily consider when figuring out her willingness to sell? Select all that apply. Correct Answer(s) the cost of personal items (e.g., phone and clothes) Emily uses during babysitting the $4 in direct costs she would spend to drive to and from her babysitting job the opportunity costs of not working at the store on a Saturday when she babysits

Answer 1

Answer:

Option (B) and (D) are correct.

Explanation:

The opportunity cost refers to the benefit that is foregone by choosing some other alternative. Simply, it is the benefit that is obtained from the next best alternative.

Let's consider this statement: The opportunity cost of investing in capital is the loss of the consumption that is obtained from the transfer of resources towards investment.

Following are the costs that she must consider:

(i) The $4 in direct costs she would spend to drive to and from her babysitting job.

(ii) The opportunity costs of not working at the store on a Saturday when she babysits.