A Rational Consumer Decision

What is the rational choice for a consumer based on the given data?

Answer:

The correct answer is option b.

Explanation:

The direct cost of a movie is $4. The opportunity cost of 2 hours of time is $12×2= $24. The total cost of watching the movie will be $24 + $4 = $28. The direct cost of playing a game of miniature golf is $13. The opportunity cost of 1 hour time in playing is $12. The total cost of playing golf is $13 + $12 = $25. The marginal utility derived from both are same. Since the cost incurred in playing golf is comparatively lower, a rational consumer will consume play golf instead of renting a movie.

Understanding Consumer Behavior in Decision Making

Consumer decision making involves evaluating options based on costs and benefits to maximize utility. In this scenario, the consumer has to choose between renting a movie for $4 and spending 2 hours watching it, or playing miniature golf for $13 that takes 1 hour. With the given marginal utilities being equal and the consumer valuing time at $12 an hour, a rational decision can be determined.

By calculating the total costs and opportunity costs for each option, we can see that playing miniature golf is the more cost-effective choice. The total cost of playing golf is $25, which is lower than the total cost of watching the movie, which is $28.

Additionally, since the consumer values time at $12 an hour, the opportunity cost of spending 2 hours watching the movie is $24, while the opportunity cost of playing golf for 1 hour is $12. This further supports the decision to play miniature golf over renting the movie.

Therefore, based on the rational consumer behavior model, the consumer in this scenario would most likely choose to play miniature golf instead of renting the movie, as it offers a lower total cost and aligns with maximizing utility.