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.Yet,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)He loses a total of $120 per day,so his decision is irrational.
C)The $80 price of skiing is not an opportunity cost and so did not affect Adam's decision.
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 of spending a day skiing (i.e. the enjoyment he gets from skiing) is greater than the marginal cost (i.e. the $80 for skiing and $40 lost wages). If the enjoyment he gets is worth more than $120 to him, then it makes sense for him to go skiing. The fact that he is willing to pay $80 to go skiing suggests that he values the experience more than $80, so it is possible that his decision is rational.

Going Skiing Will Cost Adam $80 a Day