Principles Of Microeconomics
Principles Of Microeconomics
13th Edition
ISBN: 9780135162170
Author: CASE, Karl E., Fair, Ray C., Oster, Sharon M.
Publisher: Pearson,
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Chapter 2, Problem 1.1P

(a)

To determine

Relevance of opportunity cost.

(a)

Expert Solution
Check Mark

Explanation of Solution

The opportunity cost of going home is lost the time that can be used for other purposes like studying.

Economics Concept Introduction

Opportunity cost: Opportunity cost is the best alternative costs that forgo or give up when a decision or choice has to be taken.

(b)

To determine

Relevance of opportunity cost.

(b)

Expert Solution
Check Mark

Explanation of Solution

Opportunity cost of riding bicycle 20 miles every day is alternative use of that time.

Economics Concept Introduction

Opportunity cost: Opportunity cost is the best alternative costs that forgo, or give up, when a decision or choice has to be taken.

(c)

To determine

Relevance of opportunity cost.

(c)

Expert Solution
Check Mark

Explanation of Solution

Opportunity cost of Federal government is value of other goods and services that the government can buy with that tax revenue.

Economics Concept Introduction

Opportunity cost: Opportunity cost is the best alternative costs that forgo, or give up, when a decision or choice has to be taken.

(d)

To determine

Relevance of opportunity cost.

(d)

Expert Solution
Check Mark

Explanation of Solution

The opportunity cost of foreign government is value of other goods and services that the government can buy with the subsidy amount.

Economics Concept Introduction

Opportunity cost: Opportunity cost is the best alternative costs that forgo, or give up, when a decision or choice has to be taken.

(e)

To determine

Relevance of opportunity cost.

(e)

Expert Solution
Check Mark

Explanation of Solution

Opportunity cost of upgrading balcony is alternative use of that money.  

Economics Concept Introduction

Opportunity cost: Opportunity cost is the best alternative costs that forgo, or give up, when a decision or choice has to be taken.

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The preferences of a consumer are represented by the following utility function: U = min (×1, 2x2) If income is 100 and p1=p2=1 a) What is the optimal bundle? b) If p₁=4, what is the new optimal bundle? c) If p2=4, what is the new optimal bundle? d) Decompose the price effect into income and substitution effect and provide a graphical representation of your results.
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