1. Liza needs to buy a textbook for the next economics class. The price at the college bookstore is $65. One online site offers it for $55 and another site, for $57. All prices include sales tax. The accompanying table indicates the typical shipping and handling charges for the textbook ordered online.

Shipping method Delivery time Charge
Standard shipping 3–7 days $3.99
Second-day air 2 business days $8.98
Next-day air 1 business day $13.98 a. What is the opportunity cost of buying online instead of at the bookstore? Note that if you buy the book online, you must wait to get it.

The opportunity cost of buying online instead of at the book store is time. Liza would be forgoing valuable time that she could be using to study out of said text book in order to save a couple of dollars. In a fast pace college environment, this would not be the wisest choice, as that time studying could be the difference in a passing or failing grade.

b. Show all of the relevant choices for this student. What determines which of these options the student will choose?

Same day at the student book store- $65
Online for $55 plus shipping would be $58.99, $63.98 or $68.98
Online for $57 plus shipping would be $60.99, $65.98 or $70.98

The determining factor in Liza’s choice is going to be cost/time effectiveness. Is it going to be worth it to save a couple of dollars, and in doing so, have to wait anywhere from 1-7 days? In this situation, as noted above in my answer to “a”, I do not believe it would be very opportune to purchase the book online unless the class start date allows enough time to have the book delivered.

2. In August 2007, a sharp downturn in the U.S. housing market reduced the income of many who worked in the home construction industry. A Wall Street Journal news article reported that Wal-Mart’s wire-transfer business was likely to