You Lose $20 from Your Wallet and Decide to Miss

question 14

Multiple Choice

You lose $20 from your wallet and decide to miss an hour from work in order to search for it.To an economist,this means that:

• A) you estimate the expected cost of searching for one hour to be greater than $20.
• B) you must earn more than $20 per hour.
• C) in your estimation the expected value of searching for the lost $20 for an hour exceeds your hourly wage.
• D) you are irrational, since it is always a waste of time to search for lost money.

---

Definitions:

Utility Function

Mathematical model that quantifies satisfaction levels consumers receive from consuming various quantities of goods and services, guiding choices under constraint.

Consumer's Surplus

The gap between what consumers are prepared and capable of spending for a product or service and the aggregate sum they end up paying.

Earplugs

Small devices inserted into the ear canal to protect the ears from loud noises, water, foreign bodies, or excessive wind.

Utility Function

A mathematical representation that ranks individuals' or consumers' preferences for a set of goods or services, indicating satisfaction levels.