Reference no: EM133272449

Assignment:

Suppose that Frank and Sarah, a couple from Baltimore, are planning a summer vacation in France. Frank and Sarah have two young children, whom they plan to leave at Sarah's parent's house for ten days during their trip to France. Sarah has already booked the entire trip, including airfare ($2,500) and hotel reservations ($1,500), and has set aside $2,000 for meals, ground transportation, and entertainment expenses while they are away. Their own home will remain empty while they are gone, but their dog Frodo will stay at the Pampered Pet kennel during the ten days at a cost of $60 per day.

a. Based on this information, what are Frank and Sarah's anticipated direct costs (i.e., financial costs) of the trip? Please list the direct costs and calculate their total for the entire trip.

b. Based on the information given, identify at least one category of indirect (i.e., non-financial) cost for this trip, and explain why this category represents an indirect (i.e., non-financial) economic cost.

c. Suppose that two days before their departure date, Sarah's parents inform the couple that, in fact, they cannot take care of the children while Sarah and Frank are away because they won a Caribbean cruise in a raffle and have to leave right away. A nursing doctoral student, Jessica, has offered to stay with the children, and Sarah will pay the doctoral student $30 per day for expenses during the ten days that they'll be away. As a result, Frodo, the dog, can stay at home instead of at the kennel. Compared to the original travel and childcare and dog care plan (i.e., compared to the children staying with their grandparents and Frodo at the kennel), how does this new scenario affect the direct costs of Sarah and Frank's trip for them? From a societal perspective, how does the new plan affect the indirect costs of Frank and Sarah's trip? Briefly justify your answer.