Question

Think about your decision to buy the textbook for this course. You paid $250 for the book, but you would have been willing to pay $400 to use the book for the semester. Suppose that at the end of the semester you could keep your textbook or sell it back to the bookstore. Once you have completed the course, the book is worth only $50 to you. The bookstore will pay you 50% of the original $250.

Answer 1

If the questions are “would I choose to buy the book in the first place”, and “Would I sell the book at the end of the course”, the answer to both questions is yes. The benefit of buying the book for the course is $400 dollars, which is greater than the sales price of $250. Thus, I would buy the book. At the end of the course, the benefit of keeping the book is $50, while my potential sales price is $125 (50% of 250). Thus, I can sell the book for more than it is worth to me, so I will sell the book at the end of the course.