Q1:
In 2012 the Federal Government in Australia announced that companies with annual turnover of more than $1bn would shift from paying their taxes on a quarterly basis to a monthly basis. Consider the following statement: "The government’s new tax payment plan does not change the total amount of tax big companies pay, just the timing. So, the opportunity cost of paying tax is not affected by the new policy". Do you agree with this statement? Explain your answer.
Q2:
Sally Stockbroker has to decide whether to return to uni to study for a Master of Business Administration (MBA). The MBA will take three years to complete. Sally knows that the information relevant to calculating opportunity cost is that: (a) MBA fees are $20k per year; (b) her salary in every future year of her new working life will be $80k per year if she does not do an MBA (c) during her time studying she can work as a teacher at the uni and earn $10k per year and (d) other costs of studying such as textbooks amount to $5k per year. At present Sally has not incurred any of these costs. What is the opportunity cost of Sally doing an MBA?
Q3:
An article in The Age described how Qantas had shelved a project to update its IT system for frequent flyers. Qantas had already spent $20m on the project and its completion was forecast to cost another $40m. What is the opportunity cost for Qantas to complete the IT project? What does this imply about Qantas’ beliefs regarding the benefits it would obtain from completing the project?