Answer to Question #178034 in Microeconomics for Abdus

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 rupees, but the benefits of the vacation are psychological. How can you calculate the benefits to the costs?

Answer 1

The benefit cost ratio is calculated by dividing the present value of benefits by that of costs and investments.

The psychological benefits of the vacation should be measured too and compared to its costs.