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Question: Consider these two scenarios:

a. You have made a reservation to spend the weekend at the coast. To get the reservation, you had to make a nonrefundable $50 deposit. As the weekend approaches, you feel a bit out of sorts. On balance, you decide that you would be happier at home than at the coast. Of course, if you stay home, you forfeit the deposit. Would you stay home or go to the coast? What arguments would you use to support your position?

b. You have decided to spend the weekend at the coast and have made a reservation at your favorite resort. While driving over, you discover a new resort. After looking it over, you realize that you would rather spend your weekend there. Your reservation at the coast can be canceled easily at no charge. Staying at the new resort, however, would cost $50 more. Would you stay at the new resort or continue to the coast?

Are your decisions consistent in parts a and b? Explain why or why not?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M92333305

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