Question

You are deciding what to do for a weekend. You have narrowed down your options to two choices. One choice is to go to the football game on Saturday. You do not currently have a ticket, but value going to the game at $85. The other choice is to take a weekend getaway trip. You value the trip at $235. It will cost you $190 (all costs) to go on the trip. What is the maximum amount you would be willing to pay for a ticket to the football game? In other words, what is the most that a ticket could be priced at and still have you choose the football game over going on the trip?

A) $85
B) $95
C) $105
D) $115

Answer 1

The maximum amount you would be willing to pay for a football ticket is $85, the value you place on the game, to be indifferent between going to the game and taking a trip, considering the options provided.

Step-by-step explanation:

The question deals with making a choice between two options: going to a football game and taking a weekend getaway trip. You value attending the football game at $85, and the weekend trip is valued at $235 with an actual cost of $190. The difference between what you value the trip at and its cost, which is $235 - $190, yields a consumer surplus of $45. This surplus is the maximum extra amount you would be willing to pay for the football ticket to still receive the same level of satisfaction as from the trip.

Therefore, the most you should be willing to pay for a football ticket is your valuation of $85 plus the consumer surplus of $45, which equals $130. However, since this option isn't available in the selections, among the given choices, the maximum amount you would be willing to pay for the ticket, without considering this surplus, is $85, the value you place on attending the game.