Question
You have decided to take your daughter skiing in Utah. The best price you have been able to find for a roundtrip air ticket is
You have decided to take your daughter skiing in Utah. The best price you have been able to find for a roundtrip air ticket is $ 485. You notice that you have 20,000 frequent flier miles that are about to expire, but you need 25,000
miles to get her a free ticket. The airline offers to sell you 5,000 additional miles for $ 0.05 per mile.
a. Suppose that if you don't use the miles for your daughter's ticket they will become worthless. What should you do?
b. What additional information would your decision depend on if the miles were not expiring? Why?
a. Suppose that if you don't use the miles for your daughter's ticket they will become worthless. What should you do?
By purchasing the miles, you will
lose
save
$____.
(Select from the drop-down menu and round to the nearest dollar.)
b. What additional information would your decision depend on if the miles were not expiring? Why? (Select the best choice below.)
b. What additional information would your decision depend on if the miles were not expiring? Why? (Select the best choice below.)
A.
Because the existing miles will not be expiring, you need to take into account the cost of using them. Because there is no competitive market price for these miles (you can purchase at
$ 0.05
but not sell for that price) the decision will depend on how much you value the existing miles (which will depend on your likelihood of using them in the future).
B.
There is not enough information in this problem to answer this question.
C.
The decision is the same, it does not require additional information. The miles you have already accrued are yours. You don't need to pay for them, so you don't need to know the market price of those miles.
D.
Because the existing miles will not be expiring, you need to take into account the cost of using them. You can do this by using the price long dash $ 0.05
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