Going skiing will cost Adam $80 a day.He also loses $40 per day in wages because he has to take time off from work.Adam still decides to go skiing.
A) His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost.
B) The $80 price of skiing is not an opportunity cost and so did not affect Adam's decision.
C) He loses a total of $120 per day, so his decision is irrational.
D) Adam's lost $40 per day in wages is not an opportunity cost and so did not affect his decision.
E) Adam is definitely making a decision that is in the social interest.

Question

Quizplus · Accepted Answer

Adam's decision is rational if the marginal benefit he derives from skiing is greater than the combined cost of skiing and lost wages. Since Adam still decides to go skiing despite the costs involved, it implies that the marginal benefit he derives from skiing is indeed greater than his combined costs. Therefore, option A is the correct answer. Option B and D are incorrect since the $80 price of skiing and lost wages of $40 are both opportunity costs that Adam needs to consider when making his decision. Option C and E are incorrect since they do not accurately reflect Adam's decision-making process.

Going Skiing Will Cost Adam $80 a Day