Question

Jia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, jia typically leaves a 20% tip, and an uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend’s company and is willing to pay $30 just to spend an evening with her. If jia does not go out to the restaurant, she will eat at home, using groceries that cost her $8.
Required:
a. Calculate jays cost associated with going out to dinner with her friend.
b. Calculate jays benefits associated with going out to dinner with her friend.

Answer 1

Jia cost & benefit associated with going out to dinner is $58 and $63 respectively.

Basically, the calculation is about getting the amount that Jia spent and benefit during the dinner with her friend.

Calculation of Jia's cost

The cost includes expected cost of $40 for meal, $8 for tip (20%*$40) and $10 for Uber transport (To and fro)

= $40 + $8 + $10

= $58

In conclusion, Jay's cost associated with going out to dinner with her friend is $58.

Calculation of Jia's benefit

The benefit of the dinner includes $25 for meal valuation, amount of spending an evening with her ($30) and the $8 that she will spend if he doesn't go for dinner

= $25 + $30 + $8

= $63

In conclusion, Jay's benefit associated with going out to dinner with her friend is $63.

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