You just spent 50 on a new movie for your collection You wou

You just spent $50 on a new movie for your collection. You would have preferred the director’s cut but discovered when you got home that you bought the theatrical version. The store you bought the movie from has an “all sales final” policy, but you could resell the movie online for $30. The director’s cut sells for $70.

By how much would you need to value the director’s cut over the theatrical version for it to make sense for you to sell the version you bought and buy the director’s cut?

Solution

Solution: $40

Working: We need to value the director’s cut over the theatrical version for making sense by $40 computed as $70 -$30 = $40 (director’s cut sells minus resell value of the movie online)