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ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw
Edition 6ISBN: 978-1133150558ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw
Edition 6ISBN: 978-1133150558 Exercise 2
You are trying to decide whether to take a vacation. Most of the costs of the vacation (airfare, hotel, and forgone wages) are measured in dollars, but the benefits of the vacation are psychological. How can you compare the benefits to the costs?
Explanation
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The benefits of the vacation are psychological. Thus, we have to compare the cost of the vacation (airfare, hotel and foregone wages) with the psychological benefits, such as the relaxation that we obtain, relief from stress, physical and mental happiness, time spent with family, etc. If we feel that the benefit derived from the vacation is more than the cost of vacation, we opt to go for the vacation. The benefits perceived here are felt by one's inner selves and can vary between people.
ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw
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