Question

Kristen is planning to add new mulch to all the landscaping beds around her house. She has determined the quantity of mulch she will need and identified these two options for getting the mulch to the house:

Kristen can have all the much delivered to her yard in one dump truck for $450.

Kristen can make four trips to the garden center with her pickup truck and haul it herself. It will cost her $75 per load for the mulch, plus $25 in fuel and truck wear per load. She estimates it will take five hours to haul and unload all four loads.

What is the full cost of each method? Which method is cheaper? How is opportunity cost relevant?

Answer 1

The full cost of each method is as below:

One Dump truck	Pick up truck
450	400
	Truck wear cost
	Opportunity cost

Looking at the options getting mulch delivered in one dump truck for $450 is cheaper as Kristen can use 5 hours for doing other job and reduce the truck wear cost.

Here the opportunity cost plays a guiding role in determining the best option among alternatives. So instead of spending 5 hours, Kristen can get the truck load for $450 and earn income from the 5 hours which would reduce the cost.