Analyzing a Flawed Decision
Jamie is deciding whether to go to a movie. The movie ticket costs $15, and Jamie values the enjoyment of seeing the movie at $40. Jamie's only alternative is to babysit for a neighbor, which would earn them $30. Jamie reasons, 'The benefit of the movie is $40, which is much more than the $15 ticket cost, so I should go to the movie.'
Identify the specific error in Jamie's reasoning. Then, calculate the true economic cost of going to the movie and determine if it is an economically rational choice.
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CORE Econ
Economics
Social Science
Empirical Science
Science
Economy
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.2 Technology and incentives - The Economy 2.0 Microeconomics @ CORE Econ
Analysis in Bloom's Taxonomy
Cognitive Psychology
Psychology
Related
Weekend Activity Decision
Alex is considering buying a new video game. He values the enjoyment of playing the game at $60. The game costs $40. If he doesn't buy the game, his next best alternative is to work an extra shift at his job, which would earn him $15. According to the principle of comparing benefits and economic costs, what is the rational choice for Alex?
Rational Decision for a Weekend Trip
An individual is considering attending a special one-time workshop. The ticket for the workshop costs $75. If they do not attend, their next best alternative is to work a part-time shift, where they would earn $50. To make attending the workshop an economically rational choice, the personal value or benefit they place on the experience must be, at a minimum, greater than what amount?
An individual is deciding whether to attend a 3-hour seminar. The ticket for the seminar costs $40. If they do not attend, their only other alternative is to work a shift at their part-time job, where they earn $25 per hour. The individual values the knowledge and experience from the seminar at $120. What is the net economic surplus from attending the seminar, and based on this, is it a rational choice?
An individual is deciding whether to spend two hours at a local festival. The entrance fee is $10. They value the experience of the festival at $40. If they did not go to the festival, they would have spent those two hours working, earning $15 per hour. The individual reasons that since the $40 benefit is greater than the $10 entrance fee, it is a rational decision to go. This reasoning is correct.
Evaluating a Weekend Decision
Decision with a Prior Commitment
A student is deciding how to spend their Friday evening. They have three mutually exclusive options:
- Attend a basketball game: The ticket costs $20, and they value the experience at $70.
- Work a shift: They could earn $60.
- Study for an exam: They value this activity at $40.
Based on an evaluation of benefits versus economic costs, what is the economic cost of attending the basketball game, and is it a rational choice?
Analyzing a Flawed Decision
An individual is considering attending a special one-time workshop. The ticket for the workshop costs $75. If they do not attend, their next best alternative is to work a part-time shift, where they would earn $50. To make attending the workshop an economically rational choice, the personal value or benefit they place on the experience must be, at a minimum, greater than what amount?
Rational Decision for a Weekend Trip