An analysis of a large-scale survey of consumer food purchases by Mark Aguiar an

Question

An analysis of a large-scale survey of consumer food purchases by Mark Aguiar and Erik Hurst indicates that retired people spend less for the same market basket of food than working people do.

Use the concept of opportunity cost to explain this fact.

A.The opportunity cost of time for retired people is lower than the opportunity cost of time for working people, so retirees spend more time pursuing their favorite leisure activities and less time shopping for necessities.

B.The opportunity cost of time for retired people is identical to the opportunity cost of time for working people, because each minute is equally valuable regardless of one's employment status.

C.The opportunity cost of time for retired people is higher than the opportunity cost of time for working people, so retirees choose to search longer for bargains for the items they buy.

D.The opportunity cost of time for retired people is lower than the opportunity cost of time for working people, so retirees choose to spend more time shopping forlower-priced items compared to people who are still working.

Explanation / Answer

Correct Answer:

D

Retired people have more time than that of working class people.It is because, the opportunity cost of time for retired people is lower than that of the working class people. Hence, retired people spend more time to find goods at lower price and it cannot be done by the working class people as they have to go back to work and earn money. Though, it is not the case with the retired people.

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