This assignment will help you understand one of the most important concepts in the study of economics – opportunity cost. It will also help you see how almost every decision in daily life involves opportunity cost.
Opportunity cost of your resource is defined as “the value associated with the next best use of that resource (which you must give up).” Decisions you make should reflect your cost, and not just your out-of-pocket costs. For example, if you decide to spend two hours of your time watching TV, the this your time is the value associated with its next best use (studying, sleeping, or another use).
This exercise will ask you to relate this concept to decision making. When the I-395 Express Lanes first opened in November 2019, the toll was expected to reach up to $30 for drivers in the Northbound lanes to travel a distance of only 8 miles during the morning rush hour. Read the Washington Post story here.
Post your responses to the following question in the Opportunity Cost discussion forum.
Initial Response: Using the principles of Opportunity Cost and Rational Decision Making, explain why (or why not) drivers might pay up to $30 to save 30 minutes of travel time during the rush hour
Contribution to Discussion: After you have posted your response, review the posts of your other classmates. Add to your original post and answer this question: How much would you pay to use the HOT lane and why?
APA Paper Formatting Basics
- All text should be double-spaced.
- Use one-inch margins on all sides.
- All paragraphs in the body are indented.
- Make sure that the title is centered on the page with your name and school/institution underneath.
- Use 12-point font throughout.
- All pages should be numbered in the upper right hand corner.
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