ps001 - plates in the dining hall for the same pay,...

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1 Part A.   Should I go skiing today? From experience you can confidently say that a day on the slopes  is worth $50 to you.   The charge for the day is $30 (which includes bus fare, lift ticket,  and equipment).   Suppose that if you don't go skiing, you will work at your new job  as a research assistant for one of your professors.   The job pays $40 dollars per day, and you like it just well enough to  have been willing to do it for free.   "Should I go skiing or stay and work as a research assistant?“ C(x) = cost of skiing plus value of forgone earnings = $30 + $40  = $70 Since B(x) = $50 < C(x), don't go skiing.
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2 Part B.  Unwilling to do the job for less than $25/day Suppose instead that your job had been to scrape 
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Unformatted text preview: plates in the dining hall for the same pay, $40/day, and that the job was so unpleasant that you would be unwilling to do it for less than $25/day. Should you go skiing? There are two equivalent approaches to look at this decision . 3 Comparing the two approaches Approach I Approach II B(X)= 50 25 + B(X)= 50 C(X)= 30 + 40 C(X)= 30 (40 25) + B(X) - C(X) = 5 It makes no difference which of these two ways we handle the valuation of the unpleasantness of scraping plates. 1. Viewing the unpleasantness as the benefits we can get from going skiing because we can escape from scraping plates. 2. Viewing the unpleasantness of the plate-scraping job as an offset against its salary....
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This note was uploaded on 09/06/2010 for the course FBE ECON1001 taught by Professor Dr.demurger during the Fall '08 term at HKU.

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ps001 - plates in the dining hall for the same pay,...

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