Homework Clinic
Social Science Clinic => Economics => Macroeconomics => Topic started by: bvyeehaw on Nov 23, 2022
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Recognizing Trade-offs in Economics
Your friend, Kosuke, has an upcoming birthday. You need to decide if you will buy him a cake or bake him a cake. The local bakery has a cake he will love for $10. If you decide to buy him a cake, it will cost $2 for ingredients plus take 1.50 hours of your time. After calculating your opportunity costs, you decide that the rational choice will be to make him the cake. How much is an hour of your time worth? Round your final answer to two decimal places.
◦ $10
◦ more than $5.33
◦ $8.00
◦ less than $5.33
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less than $5.33
The marginal cost of buying the cake is $8.00 and you can make the cake in 1.50 hours. So, you must be willing to work for $8.00/1.50 hours = $5.33 an hour or less.
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Thank u