# Answer+Key+to+HW+1 - purchase a truck and a mower for...

This preview shows page 1. Sign up to view the full content.

HW 1 Intro to Economics, Econ 13 Due in class on Friday, October 8th 1. Ben decides to spend three hours working overtime on Friday evening rather than going to the bar with his friends. He earns \$10 an hour. What is Ben’s opportunity cost of working overtime in this situation? (5 points) Ans: Ben’s opportunity cost is the enjoyment he could have received had he gone to the bar with his friends. 2. Angelina can fix a meal in 1 hour, and her opportunity cost of one hour is \$50. Brad can fix the same kind of meal in 2 hours, and his opportunity cost of one hour is \$20. Will both Angelina and Brad be better off if Brad fixes meals for her and she pays him \$45 per meal? Explain. (15 points) Ans: Since Angelina's opportunity cost of preparing a meal is \$50, and Brad's opportunity cost of preparing a meal is \$40, each of them will be better off by \$5 per meal if this arrangement is made. 3. Suppose you inherit \$10,000 and decide to use the money to start a lawn-care business. You
This is the end of the preview. Sign up to access the rest of the document.