Going Skiing Will Cost Adam $80 a Day

question 8

Multiple Choice

Going skiing will cost Adam $80 a day. He also loses $40 per day in wages because he has to take time off from work. Yet, Adam still decides to go skiing.

• A) He loses a total of $120 per day, so his decision is irrational.
• B) Adam is definitely making a decision that is in the social interest.
• C) Adam's lost $40 per day in wages is not an opportunity cost and so did not affect his decision.
• D) His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost.
• E) The $80 price of skiing is not an opportunity cost and so did not affect Adam's decision.

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Definitions:

Econometrics

The application of statistical and mathematical models to analyze economic data and test hypotheses.

Empirical Economics

The branch of economics that analyzes data to develop verifiable theories or evaluate economic policies.

Economic History

The study of economies or economic phenomena in the past.

Aggregate Price Level

A measure of the overall level of prices of goods and services in an economy over a specified period, often used as an indicator of inflation.