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If the opportunity cost of time is $20 per hour, and an individual spends 20 hours in commuting every month, his opportunity cost of commute is:
A) $1 per month.
B) $20 per month.
C) $200 per month.
D) $400 per month.
3) If the opportunity cost of time is ________, and an individual spends ________ commuting every month, his opportunity cost of commute is $100 every month.
A) $5 per hour; 10 hours
B) $8 per hour; 20 hours
C) 10 per hour; 10 hours
D) $12 per hour; 5 hours
4) If an individual's opportunity cost of commute is $300 per month and his monthly commuting time is 60 hours, his opportunity cost of time is:
A) $5 per hour.
B) $10 per hour.
C) $30 per hour.
D) $60 per hour.
5) Among a set of alternatives with the same benefits, an individual is said to optimize if she chooses an alternative that:
A) has the lowest total cost.
B) has the highest total cost.
C) has the highest indirect cost.
D) has the lowest opportunity cost.
6) Among a set of alternatives with the same total costs, an individual is said to optimize if she chooses an alternative that has the:
A) highest total benefit.
B) highest risk.
C) lowest opportunity costs.
D) highest net costs.
7) An individual pays $100 every month as rent for an apartment, and his monthly opportunity cost of commuting from the apartment to his place of work is $40. Which of the following statements is then true?
A) The direct cost of renting the apartment is $140.
B) The indirect cost of renting the apartment is $140.
C) The direct cost of renting the apartment is $40, whereas the indirect cost of renting the apartment is $100.
D) The direct cost of renting the apartment is $100, whereas the indirect cost of renting the apartment is $40.
Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the monthly commuting time to work from each apartment. Ryan's opportunity cost of time is $15 per hour.
Apartment |
Commuting Time (hours/month) |
Rent ($/month) |
1 |
40 |
1,500 |
2 |
20 |
1,750 |
3 |
10 |
2,000 |
4 |
4 |
2,210 |
5 |
1 |
2,250 |
8) Refer to the table above. What is the total cost incurred per month if Ryan rents apartment 3?
A) $2,000
B) $2,050
C) $2,150
D) $2,270
9) Refer to the table above. What is the total cost incurred per month if Ryan rents apartment 5?
A) $2,150
B) $2,270
C) $2,400
D) $2,265
10) Refer to the table above. What is the opportunity cost of commute per month to work if Ryan rents apartment 2?
A) $20
B) $150
C) $200
D) $300
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