posted by Sarah on .
Lisa needs to buy a textbook for the next economics class. The price at the bookstore is $65. One online site offers the same book for $55 and another site for $57. All prices include sales tax. The following table indicates the typical shipping and handling charges for the textbook ordered online.
Delivery time = 3-7 days, S&H = $3.99
Delivery time = 2 business days, S&H = $8.98
Delivery time = 1 business day, S&H = $13.98
a. What is the opportunity cost of buying online?
b. Show all relevant choices for this student.
c. What determines which of these options the student will choose?
Take a shot, what do you think.
Hint: first eliminate the clear loser options. The $57 purchase is a clear loser as one can make an online purchase for $55. The 1-day delivery is also a clear loser. The opportunity cost of getting the book for $58.99 instead of 65 is the possible 7-day wait. Take it from here.