You get paid by the hour and can decide how many hours to work. You are...

You get paid by the hour and can decide how many hours to work. You are planning to fly to California. One roundtrip ticket costs $400 but requires changing planes in Chicago and will take 8 hours each way. The other ticket costs $500 for nonstop flights that take 5 hours each way.
1. Suppose you think that working and sitting in airports are equally pleasant or unpleasant activities. If you earn $10 an hour, which ticket should you buy?
1. What if you earn $20 an hour, which ticket will you buy?
2. Suppose you love your job and think airports are horribly stressful. The disutility of an hour in an airport for you is twice the disutility of an hour of work. Now which ticket will you buy if your wage at work is $10 an hour? Which at $20?

Solutions

Expert Solution

a) As my wage is only $10 per hour I have to buy a 400$ ticket as If I can work 40 hours I can earn the flight ticket money where as if I want to buy the 500$ ticket I have to work 50 hours which means 10 hours more. So I will better take a $400 ticket even if if takes more time consuming than 500$ ticket.

Here money is matter if I pleasent or unpleasent with sitting in airport also I have to take a $400 ticket as I have to work to get that money.

b) If my wage increase to 20$ per hour I will take a $500 ticket because here I am earning more money in a week and so I can afford a higher price ticket. I can pay higher price ,so I will take that 500$ ticket as it is a non stop flight which will not make me sit all alone in an airport

c) If I love my job and think airport are horribly stressful I will definitely take a non stop flight of 500$ even it is costly irrespective of wage I earn whether it is 10$ or 20$ per hour. If it is 10$ per hour I will work more hours and get money for my flight ticket.

So I will take a $500 flight ticket.

Rahul Sunny answered 1 year ago

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