To determine how much you would have to value seeing the Rockets and Celtics game in order to accept the ticket and go to the game, we need to compare the value of the game to the value of attending Rihanna's concert.
You mentioned that on any given day, you would be willing to pay up to $500 to see and hear Rihanna perform. However, as the ticket to see her costs $280, we can assume that you consider attending her concert as your next-best alternative activity to watching the basketball game.
Therefore, your minimum valuation to accept the ticket and go to the game would be the difference between the cost of Rihanna's concert ticket ($280) and your willingness to pay to attend her performance ($500).
Minimum valuation = $500 - $280 = $220
So, you would have to value seeing the Rockets and Celtics game at least $220 to accept the ticket and choose attending the game over Rihanna's concert.
Supposed you are a staunch fun of the Houston Rockets basketball team, and they have a game with the Boston Celtics. You are offered a free ticket to the game which is on the same night that Rihanna is performing, and her concert is your next-best alternative activity. Tickets to see Rihanna cost $280. On any given day, you would be willing to pay up to $500 to see and hear Rihanna perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Rockets and Celtics game to accept the ticket and go to the game?
1 answer