Part 1In 2015, the U.S. Supreme Court was hearing a case about a federal rule to promote reduced electricity use. In the discussing this rule, Chief Justice John Roberts related the regulation to the pricing of hamburgers:"If FERC is basically standing outside McDonald's and saying, 'We'll give you $5 not to go in,' and the price of the hamburger is $3 ... the price of a hamburger is actuallylong dash—I think most economists would saylong dash—$8, because if they give up the $5, they've still got to pay the $3."Part 2Is he correct that the true opportunity cost of a hamburger is now $8? What is the explicit cost of the hamburger? What is the additional opportunity cost of eating the hamburger?Part 3The opportunity cost of a hamburger in this example is now $[input]enter your response here . (Enter your response using an integer.)

Question

Part 1In​ 2015, the U.S. Supreme Court was hearing a case about a federal rule to promote reduced electricity use. In the discussing this​ rule, Chief Justice John Roberts related the regulation to the pricing of​ hamburgers:​"If FERC is basically standing outside​ McDonald's and​ saying, 'We'll give you​ $5 not to go​ in,' and the price of the hamburger is​ $3 ... the price of a hamburger is actuallylong dash—I think most economists would saylong dash—​$8, because if they give up the​ $5, they've still got to pay the​ $3."Part 2Is he correct that the true opportunity cost of a hamburger is now​ $8? What is the explicit cost of the​ hamburger? What is the additional opportunity cost of eating the​ hamburger?Part 3The opportunity cost of a hamburger in this example is now ​$[input]enter your response here .  ​(Enter your response using an​ integer.)

BlackTom AI · Accepted Answer

The question asks us to parse the components of cost in the given scenario and compute the opportunity cost.
First, identify the explicit monetary cost: when you purchase the hamburger, you pay $3 at the point of sale. This $3 is the explicit cost of the hamburger itself.
Second, consider the additional opportunity cost introduced by the regulation described in the scenario. If there is a policy that would pay you $5 not to eat the hamburger, then choosing to eat the hamburger means you forgo receiving that $5 subsidy. In other words, by eating, you lose the opportunity to gain $5 that was available to you as an alternative.
Third, combine these two components to get the total opportunity cost of eating the hamburger in this context. The explicit cost is $3, and the forgone subsidy (the additional opportunity cost) is $5. Adding them yields $3 + $5 = $8.
Thus, the total opportunity cost of consuming the hamburger in this example is $8, comprising $3 of explicit outlay plus $5 of foregone benefit from not taking the subsidy. The explicit cost remains $3, while the additional opportunity cost specifically attributable to choosing the hamburger is the $5 foregone subsidy.

Homework:HW6

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