Question

Jenna decides to see a movie that costs $7 for the ticket and has an opportunity cost of $20. After the movie, she says to one of her friends that the movie was not worth it. Apparently:

A. Jenna failed to apply the cost-benefit model to her decision.

B. Jenna was not rational.

C. Jenna overestimated the benefits of the movie.

D. Jenna underestimated the benefits of the movie.

Answer 1

The correct answer is option C.

Step-by-step explanation:

The cost of the movie ticket is $7.

The opportunity cost involved is $20.

The total cost of the movie will thus be $27.

Jenna would have thought that the benefit of watching the movie would be worth $27 at least.

But later she said that the movie was not worth it. This means that the cost incurred was higher than the benefits earned.

This implies that Jenna overestimated the benefits of watching the movie.