Home » Suppose you have just paid a nonrefundable fee of \$1,000 for your meal plan for this academic term. This allows you to eat dinner in the cafeteria…

# Suppose you have just paid a nonrefundable fee of \$1,000 for your meal plan for this academic term. This allows you to eat dinner in the cafeteria…

Suppose you have just paid a nonrefundable fee of \$1,000 for your meal plan for this academic term. This allows you to eat dinner in the cafeteria every evening.

(a) You are oﬀered a part-time job in a restaurant where you can eat for free each evening. Your parents say that you should eat dinner in the cafeteria anyway, since you have already paid for those meals. Are your parents right? Explain why or why not.

(b) You are oﬀered a part-time job in a diﬀerent restaurant where, rather than being able to eat for free, you receive only a large discount on your meals. Each meal there will cost you \$2; if you eat there each evening this semester, it will add up to \$200. Your roommate says that you should eat in the restaurant since it costs less than the \$1,000 that you paid for the meal plan. Is your roommate right? Explain why or why not.

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