Question

Question 3: Harold the Historian belongs to a University suffering from extreme cutbacks. His income is normally 100 per month but the University lowers it to only 5. Harold tells his friends about his bad fortune who, in return, suggest Harold quit his job and work at Starbucks where his monthly income would be 10. Harold responds that he normally would agree to take the job at Starbucks since the salary is higher, but he has already spent thousands of hours of time studying history.(a) How would an economist comment on Harold’s thinking?

Answer 1

In case Harold's economic situation is not at it best level then a change of work will be a viable option. The thing that plays a critical role is the Opportunity Cost that is involved with the decision. If Harold thinks that continuing with his current profession is costing more in his living standards than shift will be wise choice. However, bigger question is if he is willing to discount the cost that was involved in his years of practicing and learning history. So, the decision actually falls on how well he can sustain the monetary fall and how willing he is to bear the cost involved with the decision.