Proportional-scoring technique

Reference no: EM13981549

Suppose that you are searching for an apartment in which to live while you go to school. Apartments near campus generally cost more than equivalent apartments farther away. Five apartments are available. One is right next to campus, and another is one mile away. The remaining apartments are two, three, and four miles away.

a. Suppose you have a tentative agreement to rent the apartment that is one mile from campus. How much more would you be willing to pay in monthly rent to obtain the one next to campus? (Answer this question on the basis of your own personal experi- ence. Other than rent and distance from campus, the two apartments are equivalent.)

b. Now suppose you have a tentative agreement to rent the apartment that is four miles away. How much more would you be willing to pay in monthly rent to move to the apartment that is only three miles from campus?

c. What are the implications of your answers to parts a and b? Would it be appropriate to rank the apartments in terms of distance using the proportional-scoring technique?

d. Sketch an indifference curve that reflects the way you would trade off rent versus proximity to campus. Is your indifference curve a straight line?

Reference no: EM13981549

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