Question

Store	Travel Time Each Way	Price of a Dress
	(Minutes)	(Dollars per dress)
Local Department Store	15	103
Across Town	30	85
Neighboring City	60	63

Juanita makes $16 an hour at work. She has to take time off work to purchase her dress, so each hour away from work costs her $16 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling.

Complete the following table by computing the opportunity cost of Juanita's time and the total cost of shopping at each location.

Store	Opportunity Cost of Time	Price of a Dress	Total Cost
	(Dollars)	(Dollars per dress)	(Dollars)
Local Department Store		103
Across Town		85
Neighboring City		63

Assume that Juanita takes opportunity costs and the price of the dress into consideration when she shops. Juanita will minimize the cost of the dress if she buys it from the .

Answer 1

1. Local Department Store:

Opportunity cost of time = 60 minutes (15 min to reach store + 30 min to shop + 15 min to come back) = $ 16
Total cost = 16 + Price of dress = 16 + 103 = $ 119

2. Across Town:

Opportunity cost of time = 90 minutes (30 min to reach store + 30 min to shop + 30 min to come back) = $ 16 + $ 8 = $ 24
Total cost = 24 + Price of dress = 24 + 85 = $ 109

3. Neighboring City:

Opportunity cost of time = 150 minutes (60 min to reach store + 30 min to shop + 60 min to come back) = $ 16 x 2 + $ 8 = $ 40
Total cost = 40 + Price of dress = 40 + 63 = $ 103

4. Neighboring city.