Calculating Cost and Benefit of Dining Out with a Friend

Jia is considering whether to go out to dinner at a restaurant with her friend

The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend’s company and is willing to pay $30 just to spend an evening with her. If Jia does not go out to the restaurant, she will eat at home, using groceries that cost her $8.

Required

a. Calculate Jia's cost associated with going out to dinner with her friend.
b. Calculate Jia's benefits associated with going out to dinner with her friend.

Cost & Benefit Calculation

Jia cost & benefit associated with going out to dinner is $58 and $63 respectively.

Basically, the calculation is about getting the amount that Jia spent and benefit during the dinner with her friend.

Calculation of Jia's cost

The cost includes expected cost of $40 for meal, $8 for tip (20%*$40) and $10 for Uber transport (To and fro)

= $40 + $8 + $10

= $58

In conclusion, Jia's cost associated with going out to dinner with her friend is $58.

Calculation of Jia's benefit

The benefit of the dinner includes $25 for meal valuation, amount of spending an evening with her ($30) and the $8 that she will spend if she doesn't go for dinner

= $25 + $30 + $8

= $63

In conclusion, Jia's benefit associated with going out to dinner with her friend is $63.

Final answer:

Jia's total cost of going out to dinner is $58, while her total benefits are valued at $55. By weighing these costs against the benefits, Jia can determine the value proposition of dining out with her friend.

Explanation:

Calculating Costs and Benefits of Dining Out

To calculate Jia's cost associated with going out to dinner with her friend, we must consider the following expenses:

• Meal cost: $40
• Tip (20% of meal): $40 * 20% = $8
• Uber cost (both ways): $5 * 2 = $10
• Total cost to Jia: $40 + $8 + $10 = $58

To calculate Jia's benefits associated with going out to dinner with her friend:

• Value placed on the restaurant meal: $25
• Value placed on spending evening with friend: $30
• Total benefits to Jia: $25 + $30 = $55

By comparing the total costs and benefits, Jia can make an informed decision on whether going out to dinner is a value proposition for her.