Answer:
It will puchase the skirt across town as it has the less economic cost.
Explanation:
We are going to add up the opportunity cost (lost wages) to the cost of the skirt:
travel-time* Price **Opp. Cost Economic Cost
local department 30 $ 112.00 $ 13.00 $ 125.00
across town 60 $ 89.00 $ 26.00 $ 115.00
neighboring city 120 $ 70.00 $ 52.00 $ 122.00
*travel-time we multiple the time it took each eway by 2
**Opp. Cost = wages per hour x travel time / 60
Then, the economic cost is the sum of the value of the skirt and the lost wages.
We pick the lowest economic cost.
The economic cost is the type of cost that includes the opportunity cost for any business decision at the time of analyzing the economic decisions. The economic cost is the combination of losses of goods taking into consideration all the factors of profitability.
In the given case, Juanita should buy skirts from across town as it has a less economic cost of $115.
The economic cost is determined by combining the following costs:
Refer to the table attached below for determining the economic cost.
Working Note:
1. The formula to compute the opportunity cost is:
[tex]\text{Opportunity Cost}&=\dfrac{\text{Wages per hour}\times \text{Travel time}}{60\;\text{minutes}}[/tex]
2. The price of each skirt is given.
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https://brainly.com/question/24130824
