Assignment task: Read the scenario and answer the questions given only the information below.
You love the mountains and yesterday you bought a new snow jacket for $150. This morning, your best friend Jessie invites you to go snowboarding. Lodging for the trip will be provided by Jessie's parents so you don't have to worry about getting a hotel, but you do need to pay for three days of snowboarding. Lift tickets are $80 a day, snowboard rental is $40 per day, and
you expect to pay a total of $100 for snacks and souvenirs. You and Jessie work at the same place making $12 per hour after taxes. Each of you is scheduled to work 30 hours next week but your boss is pretty laid back so you could probably get the week off. You view your checking account and find out that you have $500 in the bank. Jessie wants to know right away if you want to go snowboarding.
1. What is your explicit cost (out-of-pocket cost) for going snowboarding all three days? How did you get that number?
2. Should you factor in the $150 you paid for the new snow jacket when calculating the cost of going snowboarding? Why?
3. Explain why the explicit cost is not the only cost of going snowboarding.
4. How much will you earn if you don't go snowboarding and work instead? How did you get that?
5. Calculate your total economic cost for going snowboarding. How did you get that?
6. How much would you have in the bank if you stay and work for the week and deposited your entire paycheck into your bank account? How did you get that?
7. How much will you have in the bank if you go snowboarding? How did you get that?
8. Jessie thinks that the trip is free for her because her parents are paying for her lodging, lift tickets, snowboard rental, snacks, and souvenirs. Tell her why the trip still isn't free for her.
9. You research other options and find out that sledding costs $30 a day and you don't need a lift ticket. What is your total economic cost if you go sledding for all three days?
10. How much more does snowboarding all three days cost than sledding all three days?
11. You really want to go snowboarding at least one day. What is the additional explicit cost of going snowboarding for one day if you don't buy snacks and souvenirs? How did you get that number?
12. What do you think that you should do: go snowboarding, go sledding, a little of both, or stay home and work?