Question

Chapter 7 Measuring Satisfaction

Identify people who would be likely to value time very highly and others who would place a low value on time. Discuss how those two groups of people would react to such situations as:

(a) waiting in line to buy a product.

(b) shopping for hours to find the best prices on products such as cars, stereo equipment, and soft drinks...

(c) hiring cleaning, laundry, and other service...

Use real world examples and scenarios to support you argument. Your response must be a minimum of 200 words

my professor told me is about the opportunity cost!

Answer 1

People value time based on the opportunity cost of it. Opportunity cost, as generally understood is not restricted to financial or monetary cost. It is the real output forgone, which could be lost time or any other benefit that provides utility. In its simplest definition, it is the opportunity of cost of the alternative or next best use. Using this context;

A). IF a person is waiting in a line to but something, then he is letting the opportunity of utilizing this idle time for productive uses to let go. He could have used this time to work longer after work or could've attended to more customers if he is into some kind of business like consulting, etc. He is very likely to value this idle time more than others.

B). This person will not place as high a value on time as the first one because he is taking time to make an important purchase decision which entails a huge outflow of cash (Car, stereo) and is likely to use it for a long period of time. The value of time also depends on item of purchase: Car>Stereo>Soft Drink.

C). The person in this category will value time slightly higher than the 2nd because the nature of these services is homogenous in nature and also are not that important from the perspective of cash outflow. There is also not significant personalization involve.