Question

Bill had plenty of money to buy a new car although he is reluctant to do...

Bill had plenty of money to buy a new car although he is reluctant to do so because he also wants to pay cash for his vacation this year. What element of a market economy prevents Bill from buying a new car in this scenario?

Homework Answers

Answer #1

Answer - Bill had plenty of money to buy a new car. He is also wants to pay cash for his vacation this year. If he would enough money to buy both goods then there will be no problem. Since Bill cannot buy both good simultaneously therefore he must have sacrifice one good. Either he can sacrifice buying car or paying cash for vacation this year.

The element which prevents Bill from buying a new car in this scenario is ''opportunity cost''. The opportunity cost is defined as second best alternative that a consumer can buy. Opportunity cost of buying car is higher than paying cash for vacation this year.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
250 words Deric wants to buy a new house, and to do so he needs good...
250 words Deric wants to buy a new house, and to do so he needs good credit. He has made all his rent, car, and credit card payments on time, so he should have a good credit score. Before he goes to purchase the house, he checks his credit report and finds that he has a low credit score because one of the agencies mishandled his report. This example shows the importance of?
John wants to buy a new sports car, and he estimates that he'll need to make...
John wants to buy a new sports car, and he estimates that he'll need to make a $4,600.00$4,600.00 down payment towards his purchase. If he has 2727months to save up for the new car, how much should he deposit into his account if the account earns 2.278%2.278% compounded continuously so that he may reach his goal? John needs to deposit
Derek decides to buy a new car. The dealership offers him a choice of paying $555.00...
Derek decides to buy a new car. The dealership offers him a choice of paying $555.00 per month for 5 years (with the first payment due next month) or paying some amount today. He can borrow money from his bank to buy the car. The bank requires a 6.00% interest rate. What is the most that he would be willing to pay today rather than making the payments? Derek plans to buy a $27,733.00 car. The dealership offers zero percent...
Please show works! 1. To buy his favorite car, Larry is planning to accumulate money by...
Please show works! 1. To buy his favorite car, Larry is planning to accumulate money by investing his Christmas bonuses for the next five years in a security which pays a 10 percent annual rate of return. The car will cost $20,000 at the end of the fifth year and Larry's Christmas bonus is $3,000 a year. Will Larry accumulate enough money to buy the car? How much additional will he either need or have? 2. Marc has purchased a...
The user wants to save money to buy a new car 10 years from today. Have...
The user wants to save money to buy a new car 10 years from today. Have the user input the amount that they can invest at the start of each year and the price of the car that they want to buy. What annual interest rate will they need to earn in order to be able to buy the car 10 years from today? Note: This question is from excel for accounting, so the calculation should be made in an...
Derek decides to buy a new car. The dealership offers him a choice of paying $583.00...
Derek decides to buy a new car. The dealership offers him a choice of paying $583.00 per month for 5 years (with the first payment due next month) or paying some amount today. He can borrow money from his bank to buy the car. The bank requires a 5.00% interest rate. What is the most that he would be willing to pay today rather than making the payments?
A man wants to buy a new car that has a cash price of $20,000. He...
A man wants to buy a new car that has a cash price of $20,000. He makes a down payment of $2,000, and will have payments of $360 that are paid once a month for 5 full years. 1. What is the approximate APR for this car? (7.9% , 5.0% , or 3.5%) 2. How much is the total finance charge the man will end up paying for this car? ($3,600 , $6,320 , or $1,600)
Derek decides to buy a new car. The dealership offers him a choice of paying $587.00...
Derek decides to buy a new car. The dealership offers him a choice of paying $587.00 per month for 5 years (with the first payment due next month) or paying some amount today. He can borrow money from his bank to buy the car. The bank requires a 5.00% interest rate. What is the most that he would be willing to pay today rather than making the payments? Answer Format: Currency: Round to: 2 decimal places.
Derek decides to buy a new car. The dealership offers him a choice of paying $585.00...
Derek decides to buy a new car. The dealership offers him a choice of paying $585.00 per month for 5 years (with the first payment due next month) or paying some amount today. He can borrow money from his bank to buy the car. The bank requires a 5.00% interest rate. What is the most that he would be willing to pay today rather than making the payments? SHOW FINANCIAL CALCULATIONS AND EQUATIONS, ROUND 2 DECIMALS
Alan wants to buy a new TV at $500, but he is missing $15. Jessica promised...
Alan wants to buy a new TV at $500, but he is missing $15. Jessica promised that if he gave her $100 this month, she would pay him back $125 the next month. After a month, Alan receives his money back, but the TV price has increased by 6%. What is the nominal interest rate on this loan? What is the real interest rate on this loan? Hint: you can use a CPI of 100 for the first month as...