Scenario 8-2
Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28.
-Refer to Scenario 8-2. Assume Roland is required to pay a tax of $3 each time he mows a lawn. Which of the following results is most likely?

Question

Quizplus · Accepted Answer

With the $3 tax, Roland's net income from mowing the lawn would be $22 ($25 - $3), which is still above his opportunity cost of $20. Karla's willingness to pay ($28) exceeds the cost including the tax, so the trade remains mutually beneficial.

Scenario 8-2 Roland Mows Karla's Lawn for $25. Roland's Opportunity Cost of Cost