You lose $20 from your wallet and decide to miss an hour from work in order to search for it. What would an economist conclude from your behaviour?
A) You estimate the expected cost of searching for one hour to be greater than $20.
B) In your estimation, the expected value of searching for the lost $20 for an hour is less than your hourly wage.
C) You must earn more than $20 per hour.
D) In your estimation, the expected value of searching for the lost $20 for an hour exceeds your hourly wage.

Question

Quizplus · Accepted Answer

The economist would conclude that you believe the expected value of spending an hour searching for the $20 exceeds your hourly wage, indicating that you value the potential to recover the $20 more than the income you would earn in that hour.

You Lose $20 from Your Wallet and Decide to Miss