Airline Delays:

How will commercial airlines respond to the threat of new $27,500 fines for keeping passengers on the tarmac for more than three hours?What inefficiency will this create?

Selling Used Cars:

I recently sold my used car. If no new production occurred for this transaction, how could it have created value?

Flood Insurance:

The U.S. government subsidizes flood insurance because those who want to buy it live in the flood plane and cannot get reasonable rates.What inefficiency does this create?

Goal Alignment at New York City Schools

A total of 1.800 New York City teachers who lost their jobs earlier this year have yet to apply for another job despite the fact that there are 1,200 opening.Why not?

Goal Alignment Between Airlines and Flight Crews

Planes frequently push back from the gate on time, but then wait 2 feet away from the gate until it is time to queue up for take-off.This increases fuel consumption and increases the time that passengers must sit in a cramped plane awaiting take-off.Why does this happen?

Concert Opportunity Cost 2

You were able to purchase two tickets to an upcoming concert for $100 apiece when the concert was first announced three months ago. Recently, you saw that StubHub was listing similar seats for $225 apiece. What does it cost you to attend the concert?

Opportunity Cost

The expression “3/10 net 45” means that the customers receive a 3% discount if the pay within 10 days; otherwise, they must pay in full within 45 days.What would the seller’s cost of capital have to be in order for the discount to be cost justified? (Hint: Opportunity Cost)

Dropping University Courses:

Students doing poorly in courses often consider dropping the courses. Many universities will only offer a refund up to a certain date. Should this affect their drop decisions?

Game Show Uncertainty:-

In the final round of a TV game show, contestants have a chance to increase their current winnings of $1 million to $2 million. If they are wrong, their prize is decreased to $500,000. A contestant thinks his guess will be right 50% of the time. Should he play? What is the lowest probability of a correct guess that would make playing profitable?

Hiring:-

The HR department is trying to fill a vacant position for a job with a small talent pool. Valid applications arrive every week or so, and the applicants all seem to bring different levels of expertise. For each applicant, the HR manager gathers information by trying to verify various claims on resume, but some doubt about fit always lingers when a decision to hire or not is to be made. What are the Type I and II decision error costs? Which decision error is more likely to be discovered by the CEO? How does this affect the HR manager’s hiring decisions?