Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfare is $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1,400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfare is $450. Should you use the frequent flyer coupon to go to Miami?

Question

Quizplus · Accepted Answer

If you use the frequent-flyer coupon to go to Miami, your out-of-pocket expenses would be $1,000, and you would give up the ability to save $450 to go to Atlanta. Thus, the total cost of using the frequent-flyer coupon to go to Miami would be $1,450, which is higher than your willingness to pay.

Your Classmates from the University of Chicago Are Planning to Go