Question

Microeconomics Fundamentals Question. You are trying to decide whether to take a vacation. Most of the costs of the vacation (airfare, hotel, and forgone wages) are measured in dollars, but the benefits of are psychological. How can you compare the benefits to the costs in deciding whether going on vacation is worth it?

Answer 1

In simple words, the two options can be compared with each other by using a quantified criteria. The above case only depicts the explicit costs of taking the vacation but there will be also some implicit costs such as loss os salary due to vacation.

However, these cost can be compared by considering the after effects benefits of the vacation. After spending some free time an individual might feel relaxed and can work more harder and efficiently which will increase his or her profits for the long term.

Thus, the cost should be compared with the after benefits that could be quantified.