Question

Which of the following statements is a valid economic conclusion based on this information?

Answer 1

it's the second one. it would be best for Sam to work only on making sales calls. 

Answer 2

Answer:

It would be best for Sam to work only on making sales calls.

Explanation:

To answer this question, it is necessary to understand a concept that economists call the cost of opportunity. Opportunity cost is a way of measuring the monetary loss that a person has when giving up a task to perform another task. For example, to make a sales call Sam fails to make 0.1 tax return. Similarly, for San to make a tax return, he fails to make .25 sales call.

So, to produce 30 sales call, Sam stops making 3 return taxes. Also, to make 28 return taxes, San ceases to make 7 sales call. In other words, the opportunity cost of producing Sam's tax returns is greater than the opportunity cost of making sales calls. Thus, the cost-of-opportunity analysis shows that for Sam, producing sales calls is more efficient.