The market price of this ticket is $75, but the most you could sell it for is only $50. Today you discover that Ani DiFranco will be giving a concert that same evening. Tickets for the Ani DiFranco concert are still available at $75. Had you known before receiving your Dave Matthews ticket yesterday that Ani DiFranco would be coming, you definitely would have bought a ticket to see her, not Dave Matthews. True or false: From what we are told of your preferences, it follows that if you are a rational utility maximizer, you should attend the Ani DiFranco concert. Explain.

*15. Mr. Smith recently faced a choice between being

(a) an economics professor, which pays

$60,000/yr, or

(b) a safari leader, which pays $50,000/yr. After careful deliberation, Smith took the safari job, but it was a close call. “For a dollar more,” he said, “I’d have gone the other way.”

Now Smith’s brother-in-law approaches him with a business proposition. The terms are as follows:

• Smith must resign his safari job to work full-time in his brother-in-law’s business.

• Smith must give his brother-in-law an interest-free loan of $100,000, which will be repaid in full if and when Smith leaves the business. (Smith currently has much more than $100,000 in the bank.)

• The business will pay Smith a salary of $70,000/yr. He will receive no other payment from the business.

The interest rate is 10 percent per year. Apart from salary considerations, Smith feels that working in the business would be just as enjoyable as being an economics professor. For simplicity, assume there is no uncertainty regarding either Smith’s salary in the proposed business or the security of his monetary investment in it. Should Smith join his brotherin-law and, if so, how small would Smith’s salary from the business have to be to make it NOT worthwhile for him to join? If not, how large would Smith’s salary from the business have to be to make it worthwhile for him to join?

*16. You have just purchased a new Ford Taurus for $20,000, but the most you could get for it if you sold it privately is $15,000. Now you learn that Toyota is offering its Camry, which normally sells for $25,000, at a special sale price of $20,000. If you had known before buying the Taurus that you could buy a Camry at the same price, you would have definitely chosen the Camry. True or false: From what we are told of your preferences, it follows that if you are a rational utility maximizer, you should definitely not sell the Taurus and buy the Camry. Explain.