Microeconomia

Daysi Meregildo
Microeconomics
Homework 1

Personal consumption

Example 1:
A person has £500 to expend on a new electronic device. There are two options, the trendy Apple Ipad 3 at £479 anda regular Dell computer at £441. This person decides to buy the computer. His opportunity cost is not having the Ipad 3, maybe a more portable but not more powerful device than the computer and itcost him £38 less on prefer this last.

Example 2:
A couple is trying to buy a new family car. The options are buy a new more expensive but smaller car or a three-year-old bigger car. They decided tobuy the new car because it has full guaranty for the next 5 years. The newest car is not as big as the old car and that’s the opportunity cost for them.

Business decisions

Example 1:
Milky wayis a chocolate company. They specialize on milky products and they want to expand to the cheese market. To do so, the need to use part of the facilities they own, so they have to reduce theproduction of chocolate bars on a 25%. They decided to continue with this plan. Their opportunity cost is the reduction on production of the most demanded product but with a future vision of a new market theycan also compete.

Example 2:
Mecasid S,A it’s a importation company in the Caribbean. They own more than the 35% on the market of food, hygiene products and international franchises. Now theyare trying to expand the company to the entertainment sector and buy a network channel and a film company. But to maintain the business stability they have to close 2 franchises. They decided to keepthe franchises and don’t buy the entertainments firms. As an established company they decided to continue as they where going in the business and not take the risk. That’s their opportunity cost.Government spending

Example 1:
The Dominican government have decided to invest more on education as consequence of the international low rating in this sector, but they also need too increase the...