1

Chapter Case.

CASE STUDY 1
Scenario #1
Mr. Kier rents a house for $24,000 per year. The house can be purchased for
$200,000 and Mr. per year.

Question:
1. Is buying the hKier has this much money on his bank account that pays 4
percent interestouse a good deal for Mr. Kier?
2. Where does opportunity cost enter the picture?

Scenario #2
The acquaintance party is near, if by chance, you are the chairman of your school,
what would you change if your budget were cut by 10 percent? By 25 percent? Or
by 50 percent?

Scenario #3
In your case your family decides you to leave college, what things would change in
your life? What, then, is the opportunity cost of your education?
Answer Sheet

Name: Pearl Jean P. Sediego

Year & Section: BSBA 2B
Course Subject: BAC1 Basic Microeconomics
Instructor: Sir Jimmy Arenas

“Your answers must be based on your own opinion, must be 2-3 paragraph per scenario.”

1. Scenario #1
- Buying house is a good deal for the tenant considering that the buyer can save
annual rent of $24,000 and he has to forgo $8,000 interest payment on the deposited
amount.

Tenant is earning $8,000 interest annually on the amount which Mr. Kier has
deposited in the bank account. If the deposited amount is used for buying the house,
then the annual rent of $24,000 can be saved which is more than the interest
earning.

2. Scenario #2
- I would reduce the additional expenditure on programs if the budget is reduced by
10 percent. Reduction in the budget leads to decrease the expenditure. As a
chairman I would advise to reduce avoidable expenditure.

3. Scenario #3
- The opportunity cost for a college student is the money they could have been
earning in a full-time job. And someone who started a job straight out of high school
has a four year head start on promotions.
As students who try to struggle with school while undertaking family responsibilities
suffer academically when I try to return to the educational system.