Question

Determine if the following statements better describe optimization in levels or optimization in differences.

a. John is attempting to decide on a movie. He determines that the new Batman movie provides him with $5 more of a
benet than the new Spiderman movie.
b. Marcia nds that the net benet of ying from Chicago to Honolulu on a non-stop United Airlines ight is $400, and the
net benet for the same trip ying on a one-stop American Airlines ight is $200.
c. Nikki decided to take the rst available parking space as she entered the student lot. She felt that the rst available
space had a $5 premium compared with all other possible spaces because she did not want to risk being late for her
exam.
d. Reagan determined that the net benet of taking the combination of two lecture courses and an online lecture course
was $100. The same three courses online gave her a net benet of $80, and all three in a lecture-based format gave her a
net benet of $90.

Answer 1

A: Optimization in differences

B: Optimization in levels

C: Optimization in differences

D: Optimization in levels

Step-by-step explanation:

Optimization in levels Vs. Optimization in differences

Optimization in levels is a method of selecting different alternatives on the basis of calculating net benefits( net benefits = benefits - costs) a person realizes from those alternatives.

Optimization in differences, on the other hand, is a method of selecting different alternatives on the basis of calculating change in levels of costs and change in levels of benefits to derive net change in benefits.

How to choose?

Optimization in levels: (net benefit) look at total benefit – total cost

Optimization in differences: look at the change in the net benefit of one option compared to another