Question

You and your family visit Orlando for a week. While there, you decide to go to Universal Studios. When you arrive, you notice that each family member can buy a day pass for $115 or a two-day pass for $150. If you want a three-day pass, the price is $170. Suppose your benefit, measured in utility, is equal to $120 in value the first day you go to the park, $50 more if you go a second day, and $15 more for the third day. What ticket, if any, should you buy

Answer 1

the second day ticket

Step-by-step explanation:

We would purchase the ticket with the highest net benefit

Net benefit = Benefit - cost of ticket

First day

Net benefit = $120 - $115 = $5

Second day

Net benefit = ($120 + $50) - $150 = $20

Third day

Net benefit = ($170 + $15) - $170 = $15

The second day yields the highest net benefit