Question 1
You earn $3,000 from a part-time job. You have a choice between spending the money now or putting it away in a bank account that pays 5 percent interest per annum. What is the opportunity cost of spending the $3,000 now? Explain your answer.
Question 2
State whether each of the following events will result in a movement along the demand curve for McDonald’s Big Mac hamburger or whether it will cause the curve to shift. If the demand curve shifts, indicate whether it will shift to the right or to the left and draw the graph to illustrate the shift. Briefly explain your answers.
a) The price of Burger King’s Whopper hamburger declines.
b) McDonald’s distributes coupons for $3 off on a purchase of a Big Mac.
c) Because of a shortage of potatoes, the price of French fries increases.