Answer to Question #132599 in Microeconomics for Mwamba

Question

Suppose you want to spend a day watching a movie with your friends at the cinema and the cost of doing so is K30 (all inclusive). Suppose that you really like going to the cinema with your friends and that you will be willing to pay K60 to do so. Suppose that the best alternative of going to the movie is to work at the campus shop at Unilus to earn K70 per day. Suppose you like working at the campus shop but only if they pay you at least K30.

Opportunity Cost
i. What is the value of working at the campus shop for you?
ii. What is the cost of going for the movie?
iii. As a rational consumer, would you consider going for the movie of working at the campus shop?

Answer 1

(I)

Value of working at campus shop for me =money I would have earn +cost of movie:

K30+k30= K60

(ii)

Money I would earn at the shop+cost movies;

K70+K30= K100

(iii)No, going to the movies cost me alot than I would earn at the shop