Jim wins a ticket on a Radio Talk Show to see a jazz band perform at an outdoor

Question

Jim wins a ticket on a Radio Talk Show to see a jazz band perform at an outdoor concert. Mike has paid $18 for a ticket to the same concert. All the other costs of attending the concert (including parking, fuel, etc.) are the same for Jim and Mike. On the evening of the concert there is a tremendous thunderstorm. If Jim and Mike have the same tastes regarding the concert and both make their decision using marginal analysis, which of the following should be true and why? Choose one of the following and brieflv explain your answer) [15 points a. Jim is more likely to attend the concert (briefly explain why?) b. Mike is more likely to attend the concert (briefly why?) c. Jim and Mike are equally likely to attend the concert (briefly why?)

Explanation / Answer

Solution :- The answer is (c)

Here in the given question Mike has paid the amount of $18 for a ticket while Jim has a offer to go free as he wins a free ticket for it

Now the amount paid by Mike is not recovered back in any case so it is just a sunk cost which we say it is irrelevant so now this cost does not effect the decision of Mike now.

Therefore both Jim and Mike are now equally likely to attend the concert

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.