Answered

You and your​ friend, Jim, have just moved out of your dorm and into a new apartment. Both of you decide that you need to get a couch. Jim thinks you should get a new one from a furniture store nearby. You feel​ that, given your​ budget, it is best to buy a used one. Your other options are to buy one online or get a couch​ custom-made at the same furniture store.
How would you arrive at an optimal solution​ here? Assume that your opportunity cost of time is​ $5 per hour.
You and Jim would need to consider​ ___________.
A. only the marginal benefit of each couch.
B. only the price of each couch.
C. the direct costs of the price of each couch and the cost of having each couch moved to your apartment.
D. the direct costs and the indirect opportunity cost of your time required to shop.
E. the indirect costs of traveling to the furniture store and the opportunity cost of your time required to shop.

Answer :

Answer:

D. the direct costs and the indirect opportunity cost of your time required to shop.

Explanation:

Opportunity cost by definition or formula, is the return on an alternative foregone less than the return on your chosen option. Considering opportunity costs in decision making or investment can lead to more profitable decision-making.

Hence in arriving at an option or optimal solution in relation t the decision on where to buy the couch, the direct costs of the price of the couch and transportation to our appartment will be considered in conjuction with the oppotunity costs

Other Questions