Question

Texas charges 8.5 percent for sales tax. Minnesota doesn’t charge sales tax on clothing. A resident of Texas is going on a trip to Minneapolis next week and is considering buying some new clothes. However, the traveller will need an extra suitcase to bring the clothing home and the airline charges an extra $25 to check another suitcase on the plane. The traveller has a $300 budget for new clothes. Should she buy the clothes in Texas or Minnesota? Use the smart decision model we learned in class. Justify your answer mathematically and include an emotional evaluation.

Answer 1

Mathematically, buying clothes in Minnesota would save the traveler a small amount due to no sales tax on clothing, even considering the $25 extra suitcase fee. Emotionally, it could be more satisfactory to shop without worrying about additional taxes. Therefore, it is slightly more advantageous to purchase clothes in Minnesota.

Step-by-step explanation:

To determine whether the traveler should buy clothes in Texas or Minnesota, we need to calculate the potential cost in each location and consider both the mathematical and emotional aspects of the decision.

In Texas, an 8.5% sales tax applies to clothing. If the traveler spends the entire $300 budget on clothes, we calculate the sales tax by converting the percentage to a decimal and multiplying by the total cost:

$300 × 0.085 = $25.50

Therefore, the amount spent on clothes plus sales tax would be:

$300 + $25.50 = $325.50

In Minnesota, there is no sales tax on clothing. Thus, the traveler could use the entire $300 budget on clothes. However, the extra suitcase costs $25 to check on the plane, bringing the total to:

$300 + $25 = $325

Mathematically, buying clothes in Minnesota is slightly cheaper when considering the sales tax savings versus the cost of the extra suitcase. Emotionally, buying clothes without the concern for additional tax could be simpler and more satisfactory for the traveler.

Considering both the mathematical calculation and the emotional evaluation, it seems slightly more advantageous to buy the clothes in Minnesota if the traveler is set on using the entire budget.

Answer 2

Answer: Buy in Texas

Explanation: Let X be the amount that can spent on clothes in Texas. The total cost would be:

Total = X + (0.085X) [The cost of the clostes plus 8.5% sales tax]

$300 = X*(1.085)

X = $276.50 on the clothes

For Minnesota, the total that can be spent on clothes is $300 - 2*(25) = $250 on the clothes. [$50 is for the extra suitcase, 2*$25 for both ways].

The extra cost of a second suitcase is higher than the sales tax in MN, so Texas is less expensive, in spite of the sales tax.

Emotionally, it is a hard decision. MN would seem to offer a more cosmopoliton range of choices than Texas, and that is exciting. But only a few in Texas wear cosmopoliton, prefering durable, cowboy, big-buckle fashion. So while not as exciting, your friends won't tease you about your MN style choices.