a. Before deciding for supermarket B, check the transportation, and time, and other costs. The other costs involved are enumerated below.
- Going to supermarket B and the return journey may be risky and not worth Rs. 100. Therefore, consider if the item at Supermarket A and Supermarket B is of equal quality.
- The price of the item at Supermarket B may be reduced because the item is nearing its expiry date. The time for going to supermarket B can be put into more productive activity worth more than Rs. 100.
- These considerations must not be overlooked. After factoring in some of these considerations in making the decision, I may not go to supermarket B.
b. The opportunity cost of my decision (that is, not going to supermarket B) is Rs. 100 (Rs. 200 - Rs. 100) without considering the transportation and time costs and other risk factors.
- Opportunity cost refers to the potential gain or benefits forfeited when an alternative decision is made.
Thus, going to supermarket B may not make economic sense at the end.
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