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One type of systematic error arises because people tend to think of benefits in percentage terms rather than in absolute dollar amounts. As an example, Samir is willing to drive 20 minutes out of his way to save $4 on a grocery item that costs $10 at a local market. But he is unwilling to drive 20 minutes out of his way to save $10 on a laptop that costs $400 at a local store. Instructions: Round your answers to 1 decimal place.
A. In percentage terms, how big is the savings on the grocery item?
On the laptop?
Instructions: Enter your answers as whole numbers.
B. In absolute terms, how big is the savings on the grocery item?
On the laptop?
C. If Samir is willing to sacrifice 20 minutes of his time to save $4 in one case, shouldn't he also be willing to sacrifice 20 minutes of his time to save $10?

Respuesta :

Answer:

(A) In percentage terms,

Savings on the grocery item:

[tex]=\frac{savings\ on\ grocery\ item}{cost\ of\ grocery\ item}\times100[/tex]

[tex]=\frac{4}{10}\times100[/tex]

      = 40%

Savings on the laptop:

[tex]=\frac{savings\ on\ laptop}{cost\ of\ laptop}\times100[/tex]

[tex]=\frac{10}{400}\times100[/tex]

      = 2.5%

(B)  In absolute terms,

savings on the grocery item = $4

savings on the laptop = $10

(C) Yes, he should sacrifice 20 mins to save $10 since he does the same for less savings. Hence, he should also sacrifice his time to save $10 from laptop which is greater than the savings from grocery item.

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