Answer to Question #109438 in Microeconomics for Tyler

Question

As a graduate student, Justin spends his daily 24 hours across three tasks/activities: doing research, sleeping and teaching. Teaching pays a flat rate of $25 per hour. Justin has optimized his allocation of time, and decides to spend 7 hours sleeping.

1. What’s the monetary value (or range of values) for Justin’s 7th hour of sleep?
2. What’s the monetary value (or range of values) for Justin’s 8th hour of sleep? NB: Justin does not actually spend 8 hours sleeping, only 7.

Answer 1

1. It seems that the monetary value (or range of values) for Justin’s 7th hour of sleep is $0, because it doesn't cost anything. However it's opportunity cost is $25, because Justin could earn $25 during this hour instead of sleeping.
2. The monetary value (or range of values) for Justin’s 8th hour of sleep is $25.