Kristen Is Planning to Add New Mulch to All the Landscaping

question 73

Essay

Kristen is planning to add new mulch to all the landscaping beds around her house. She has determined the quantity of mulch she will need and identified these two options for getting the mulch to her house:
1. Kristen can have all the mulch delivered to her yard in one dump truck for $450.
2. Kristen can make four trips to the garden center with her pickup truck and haul it herself. It will cost her $75 per load for the mulch, plus $25 in fuel and truck wear per load. She estimates it will take about five hours to haul and unload all four loads.
What is the full cost of each method? Which method is cheaper? How is opportunity cost relevant?

---

Definitions:

Price Level

The current pricing average for every produced good and service within the economy.

Money Demand Curve

A graph showing the relationship between the interest rate and the total amount of money that consumers and businesses wish to hold at any given time.

Nominal Variable

A variable measured in terms of money that has not been adjusted for inflation, reflecting the current price level.

Real Variable

An economic measure that has been adjusted for changes in price level, enabling comparison of quantities across different times.