Question
You have to purchase $600 worth of staples. You have just found out that the stationary store across from you charges $300 more than the
You have to purchase $600 worth of staples. You have just found out that the stationary store across from you charges $300 more than the warehouse outlet 20 miles away. Would you spend the 40 minutes to drive to the warehouse? Now, assume you are buying a Porsche that costs $100,000. You have just found out that the Porsche dealer 40 minutes away offers the Porsche for $300 less. Assuming you can receive after-market service in both locations, would you drive 40 minutes to pay $99,700? What should you do from an economic perspective? Is this what you would be tempted to do?
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