Mary will drive across town to take advantage of a 40 percent off sale on a $40 blouse, but will not do so to take advantage of a 10 percent off sale on a $1,000 stereo. Assuming that her alternative is to pay list price for both products at the department store next to her home, is her behavior rational?

Question

Business

Michelle Graham

2 August, 16:29

Mary will drive across town to take advantage of a 40 percent off sale on a $40 blouse, but will not do so to take advantage of a 10 percent off sale on a $1,000 stereo. Assuming that her alternative is to pay list price for both products at the department store next to her home, is her behavior rational?

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Answers (1)

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Charlize Reynolds · Answer 1

No, her behavior is not rational.

Explanation:

Mary would save $16 on the $40 blouse and $100 on the $1,000 stereo. Considering this, she should drive across town if the discount is higher than the cost of driving to go there. So, taking into account that on the blouse she would save $16 and on the stereo she would save $100, it is not rational that she would make the trip for the discount on the blouse but she won't do it for the discount on the stereo.