Going Skiing Will Cost Adam $80 a Day

question 126

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.Adam still decides to go skiing.

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

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Definitions:

Incremental Value

The additional value generated by undertaking a new project or decision, calculated as the difference between the value with and without the project.

Outstanding Stock

Outstanding stock is the total number of shares of a corporation that have been issued and are held by shareholders, including restricted shares owned by the company's officers and insiders.

Cash Deal

A transaction where payment is made in full using cash or cash equivalents rather than financing or trading.

Incremental Value

The additional or extra value generated by undertaking a certain action or investment, compared to not doing so.