Question

You have the option to play tennis or a round of golf (but not both). The tennis match requires you to take 2 hours off from work and the round of golf requires you to take 4 hours off from work. Playing tennis has value to you equal to $70, while golf has value to you equal to $95. Tennis courts are publicly available at no cost, but golf costs $30 per round. Suppose your wage from working is $10 per hour. The net benefit from playing tennis is and the net benefit from playing golf is $ and the net benesten (Enter your responses as integers Therefore, you show Therefore, you should play

Answer 1

Net benefit from playing tennis = value - opportunity cost

That is , = $70 - ($10*2) = $70 - $20 = $50

So , net benefit from playing tennis = $50

Similarly , net benefit from playing a round of golf = value - cost - opportunity cost

That is , = $95 - $30 - ($10*4) = $65 - $40 = $25

So , net benefit from playing a round of golf = $25

Therefore , it will be beneficial to play tennis as it gives a higher net benefit ($50 > $25) than playing a round of golf.

So , tennis should be played.