I have lost a ticket to go to a concert this weekend. I had paid $50 for the ticket. A new one will cost me $50. I am debating about whether or not to go to the concert. Assuming my time is worth $25, what is the minimum level of benefits that would make a decision to go to the concert a rational one? a. $25b. $50c. $75d. $100e. $125

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Business

Vincent Schaefer

1 April, 14:34

I have lost a ticket to go to a concert this weekend. I had paid $50 for the ticket. A new one will cost me $50. I am debating about whether or not to go to the concert. Assuming my time is worth $25, what is the minimum level of benefits that would make a decision to go to the concert a rational one? a. $25b. $50c. $75d. $100e. $125

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Answers (1)

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Carley Harrell · Answer 1

The correct answer is option e.

Explanation:

Going to the concert will be a rational decision if the cost incurred is equal to the benefit earned.

Here, the ticket costs $50. Since the ticket is lost a new ticket is needed.

The value of time is $25.

The total cost will include both implicit as well as explicit costs.

The explicit cost is the cost of tickets. The implicit cost is the value of time.

The total cost involved is

= $50 + $50 + $25

= $125

For the decision to be rational the benefit earned should be at least equal to $125.