Suppose that you are searching for an apartment in which to live while you go to school.
Question:
a. Suppose you have a tentative agreement to rent the apartment that is one mile from campus. How much more would you be willing to pay in monthly rent to obtain the one next to campus?(Answer this question on the basis of your own personal experience. Other than rent and distance from campus, the two apartments are equivalent.)
b. Now suppose you have a tentative agreement to rent the apartment that is four miles away. How much more would you be willing to pay in monthly rent to move to the apartment that is only three miles from campus?
c. What are the implications of your answers to parts a and b? Would it be appropriate to rank the apartments in terms of distance using the proportional-scoring technique?
d. Sketch an indifference curve that reflects the way you would tradeoff rent versus proximity to campus. Is your indifference curve a straight line?
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Related Book For
Making Hard Decisions with decision tools
ISBN: 978-0538797573
3rd edition
Authors: Robert Clemen, Terence Reilly
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