Question

You are trying to decide whether to purchase the latest Harry Potter book online or borrow it from the library. There is no charge for borrowing a book from the library, but going to the library takes more time than ordering a book online. Regardless of how you get the book, its benefit to you is the same. If the cost of buying the book online is $13, then you should: Select one:
a. borrow the book from the library because you can get it from the library for free.
b. borrow the book from the library if the cost of doing so (in terms of the extra time it takes) is less than $13.
c. borrow the book from the library if the cost of doing so (in terms of the extra time it takes) is greater than $13.
d. buy the book online because it takes less time.

Answer 1

Answer:

The correct answer is option b.

Explanation:

The decision is to be made whether to borrow the book from the library or to purchase it online. There is no charge for borrowing from the library. But going to the library takes more time than ordering the book online.  

The benefit from the book will be the same whether it is borrowed or ordered online. The cost of buying a book online is $13.

According to the cost-benefit principle, if the cost of borrowing in terms of time involved is less than $13, then it is profitable to borrow from the library.